RIAs and broker-dealers charge ahead in prep for DOL fiduciary rule

Many advisory firms have been progressing in changes required to meet the new regulation, despite the first delay and a broader review that continues

May 23, 2017 @ 3:04 pm

By Bruce Kelly and Liz Skinner

+ Zoom

Registered investment advisers and broker-dealers are taking the Department of Labor's decision to decline another round of delays for the fiduciary rule in stride.

Indeed, it looks to be business as usual for registered investment advisers, although some firm heads discussed this morning the need to be even more vigilant with respect to record-keeping, especially with individual retirement accounts, to be able to show they're acting in clients' best interests.

"I thought the rule was going to die on the vine or be punted in perpetuity, so I am pleasantly surprised to see that it's moving forward," said Douglas Boneparth, president of Bone Fide Wealth. "This is ultimately good for Americans and the financial services industry."

After spending millions of dollars to prepare for the new rule, some large brokerage firms were mum on the DOL fiduciary regulation becoming applicable next month.

An LPL Financial branch manager, who asked not to be identified, said at midday Tuesday the firm had yet to comment directly to advisers about the announcement. A spokeswoman for Raymond James Financial Inc., Anthea Penrose, declined to comment.

A registered rep with Cetera Advisors, who asked not to be identified, said the firm last week had a telephone conference, saying it expected no further delays.

"They've been working diligently to prepare for this, and working all along like there would be no delays," he said.

Labor Secretary Alexander Acosta confirmed Monday the fiduciary rule will become applicable June 9. The rule's implementation had been delayed 60 days — from April 10 to June 9 — while the DOL reassessed the regulation under a directive from President Donald J. Trump.

Paul Pagnato, founder of advisory firm PagnatoKarp, said the DOL made a strong statement with its decision, even though he expects the agency will make some tweaks to the rule after the partial implementation date of June 9 and before the Jan. 1, 2018, full implementation date. Overall, he said the news is good for retirement savers and firms that work in their best interests.

His fee-only firm talks with clients every week who specifically say they want to work with a fiduciary.

"It's becoming obvious that a firm that isn't focused on a client's best interest is looking silly right now," he said.

Jamie Hopkins, co-director at The American College, said advisory firms need to make sure they are compliant or able to show a good faith effort to comply with the rule or they could be put out of business.

"For some companies, it will be a boon for business, while for others the fiduciary rule creates significant challenges," he said.

Firms making changes to comply with the rule should ensure they are communicating with clients about those modifications and are documenting their processes, Mr. Hopkins said.

Rob Foregger, co-founder of NextCapital, a digital advice platform for large financial services firms, said the industry is moving toward a fiduciary model with or without a new fiduciary standard.

"That is a megatrend that's bigger than the regulation debate itself," he said.

Digital advice is considered key for some firms that seek to implement the new rule's requirements and provide affordable financial advice in clients' best interest in a scalable manner.

The industry has worked hard to prepare for the new fiduciary standard over the past 18 months, despite the multitude of questions that have popped up in the last six months with Mr. Trump seeking a delay, Mr. Foregger said.

"Some firms had clearly put things on hold, but a lot of others are looking at this as an offensive strategy to provide legal and scalable advice to consumers," he said.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

B-D Data Center

Use InvestmentNews' B-D Data Center to find exclusive information and intelligence about the independent broker-dealer industry.

Rank Broker-dealers by

Upcoming Event

Apr 30

Conference

Retirement Income Summit

Join InvestmentNews at the 12th annual Retirement Income Summit - the industry's premier retirement planning conference.Much has changed - and much remains to be learned. Attend and discuss how the future is full of opportunity for ... Learn more

Featured video

Events

How politics are moving markets

The financial services industry stands at the unique intersection of politics and market fluctuation. Clients are anxious and the right adviser can steady he waters. Scott Kubie of Carson Group explains how.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

Trump rejects idea of new caps on 401(k) savings in tax plan

GOP reportedly had been considering reducing the cap on the annual amount workers can set aside for 401(k)s.

Finra's stats reveal an industry in decline

The broker-dealer regulator reports fewer entities under its watchful eye.

T. Rowe Price steps up its game to serve financial advisers

The Baltimore-based mutual fund giant is more aggressively targeting financial advisers with a beefed-up wholesale crew and placement on custodial platforms.

The most important tax changes for 2018

The Internal Revenue Service issued inflation adjustments to more than 50 tax provisions for 2018.

Shift to Roth 401(k)s 'highly likely' part of tax reform: former Treasury official Mark Iwry

Mandated contributions to Roth accounts would likely only be partial, as opposed to having a full repeal of pre-tax accounts.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print