News that President Donald J. Trump plans to order a stop to the DOL fiduciary rule drew mixed reactions from financial advisers. Find out how they think the efforts to implement the rule will impact their businesses and the industry going forward.
Steve Savage, CEO, Litman Gregory:
"Imagine a segment of the health care industry that is allowed to choose which drug to give a patient based how much the drug company pays them. Now imagine they argue against a rule that prevents them from prescribing $200 pills that don't work as well as $100 pills, saying it's bad for the patient because the hassle adds cost. It's that simple."
Malcolm Makin, president, Professional Planning Group:
"You cannot legislate morality. Stricter rules don't make good people better. The problem with the DOL rule is not that it doesn't make sense. It doesn't really protect the consumer. It simply makes it harder for good advisers to do their work. It has always been great business practice to put your client's interest first.
In making commissions a conflict of interest, smaller, younger and less sophisticated investors became very difficult for advisers to work with because they would usually not have enough in assets to warrant paying a fee versus utilizing a simple commission-based product."
Joe Heider, president, Cirrus Wealth Management:
"I believe that it will give the industry time to catch their breath. But that no matter what, the industry has moved toward the DOL fiduciary model as best practices."
John Anderson, managing director, SEI Investments Co.:
"The industry would be wise to continue down the path of full fiduciary business implementation. Even with the DOL rule's delay, fiduciaries should strive to put clients' interests first. We remain committed to providing a suite of fiduciary services that help our clients ease through this transition in alignment with the level-fee trend."
Eric Roberge, founder, Beyond Your Hammock:
"I've been supporting the DOL rule since the beginning because it's good for clients. Now that it's not happening, I've realized that it's actually better for my business this way. I can now continue to differentiate myself as a fiduciary."
Ray Ferrara, chairman and CEO, ProVise Management Group:
"I think it's a huge loss for the American investor to not have the total confidence of knowing that whoever is assisting them with retirement planning may not be doing it with their best interests in mind. Lots of studies say that people think their financial adviser is working in their best interests, and many are, but unfortunately, there are a significant number of people who will be hurt by people delighted that the rule not going into effect."
Gary Schatsky, CEO, ObjectiveAdvice.com; former president, NAPFA:
"It's a tremendous defeat for the public. For the first time, some rules were put in to protect the public in the financial space. This is unraveling something that the public has been clamoring for for decades. The arguments against it has been that the smaller investor needs to be protected by regulation, while the reality is that investors of all sizes have been taken in by the lack of regulation. The only positive thing that can be said is that during the rollout of DOL, more and more consumers became aware of the necessity for a fiduciary for providing advice."