From Hillary Clinton to Charles Schwab, top quotes on the DOL fiduciary rule

Politicians, custodians, broker-dealers, wirehouses, advisers and more shared their perspective on the landmark legislation

Apr 6, 2016 @ 4:14 pm

By Alessandra Malito

The financial services industry can finally let go of its collective breath now that the Department of Labor's fiduciary rule, which requires all advisers to work in their clients' best interest on retirement accounts, was released on Wednesday.

Politicians, custodians, broker-dealers, wirehouses, advisers and more shared their perspective on the regulation. Some were glad that the rule shines a light on the dangers of commission-based financial advice, while others said it is too soon to tell whether it will actually benefit the Americans it seeks to help. Here are some of the top statements:

Politicians

Hillary Clinton, Democratic presidential candidate

"Wall Street shouldn't be allowed to put its own interests before those of American families and their retirement savings. Today's announcement will stop Wall Street from ripping off families, save seniors billions, and help ensure American workers can retire with dignity and security. And it reminds us that when progressives come together to fight for families, we can build an economy that works for everyone, not just those at the top. As President, I will defend and build on President Obama's financial reforms, and I will work every day to ensure that the financial sector is serving the interests of consumers, retirees, workers and families — not just its own bottom line."

Mitch McConnell, R-Ken., Senate Majority Leader

"Some have estimated that investment fees could more than double under this regulation. Here's what that could mean: Access to critical retirement advice for those who can afford it, and restricted access to affordable advice — and fewer retirement savings as a result — for too many lower- and middle-class Americans. It reminds some people of Obamacare. Here's why … Like Obamacare, it threatens to upend an entire industry, threatens to increase costs and decrease access, and threatens to hurt the very people it's aimed at helping. This regulation could have the effect of discouraging investment advisors from taking on clients with smaller accounts. What that means is that smaller savers — everyday Americans trying to plan for their future — could have less access to sound investment advice ... this regulation seems to have always been more about politics than good policy … America's Middle Class deserves responsible solutions, not far-reaching regulations that could jeopardize the retirement security of the very people it purports to help."

Nancy Pelosi, D-Calif., House Minority Leader

"While most advisors honor their responsibility to their clients, an unscrupulous few allow conflicts of interest to place their own financial interests above those of retirees. For some, this bad counsel can result in the loss of more than a quarter of a retiree's savings. Furthermore, the absence of a fiduciary responsibility fosters the distrust that keeps many hard-working Americans who need sound financial advice out of the market entirely … Americans scraping and saving for retirement deserve to know their financial advisor will help them safeguard their future — and frankly, many Americans expect this already. The final fiduciary standard rule is a vital step forward that will strengthen the retirement security and confidence of every American."

Paul Ryan, R-Wisc., Speaker of the House

"Saving for the future is daunting enough without Washington trying to make it harder. That's why House Republicans, led by Phil Roe, Peter Roskam, and Ann Wagner, have held the Obama administration accountable throughout the fiduciary rule process. While it is clear that public and congressional scrutiny are making a difference, we will continue to look at every avenue to protect middle-class families and small businesses from government overreach."

Regulators

William F. Galvin, Massachusetts Secretary of the Commonwealth

"Requiring financial advisers to put the interest of retirees first will help protect those retirees from being sold unnecessary financial products that serve mainly to generate high commissions. Much credit for these rules being in place goes to Sen. Elizabeth Warren for her tireless work over years to extend this protection to those whose retirement funds have been at the mercy of advisers and brokers who put high commissions and fees before the interest of the retirees … It has been a years-long effort, fought every step of the way by the financial services industry."

Michael S. Piwowar, Commissioner, Securities and Exchange Commission

"I am disappointed that the rule announced today seems to ignore the chorus of voices that questioned whether it will restrict middle-class families' and minority communities' access to professional financial advice by making retirement advice unaffordable. I am fearful that those concerns, which were widely and bipartisanly held, will prove to be true once the rule becomes effective."

Wirehouses

John Thiel, Head, Merrill Lynch Wealth Management:

"We are pleased that Secretary Perez and the Department of Labor staff have worked to address many of the practical concerns raised during the comment period. Most important, we support a consistent, higher standard for all professionals who advise the American people on their investments. As we study the details of the final rule, we hope to continue what has been a constructive dialogue with the Department about how to implement a best interest standard effectively and efficiently for the benefit of our clients, advisors and shareholders."

Morgan Stanley

"Putting clients' interests first is a core value of Morgan Stanley. While it will take some time to analyze all of the rule's details, we have been planning for it since it was initially proposed and have been making investments in the systems and technology that will enable us to offer compliant solutions to clients whose retirement accounts are affected."

Wells Fargo

“Wells Fargo has been an active advocate for our clients and financial advisors during the DOL's rule-making process. We have a robust plan in place for reviewing the final rule, which we hope will reflect the suggestions that we and others have offered in order to avoid unintended negative impacts on investors. Wells Fargo has long supported a best interest standard and believes that professional financial advisors have a crucial role to play in encouraging retirement saving and investing. As one of the largest and strongest financial services companies, we enjoy a distinct advantage in our ability to adapt to this change.”

Broker-dealers

Cambridge Investment Research

"We are eager to fully digest the rule as announced and our experts are beginning to assess the 1,000-plus pages posted this morning. We do appreciate the apparent compromise on an implementation schedule — and we continue to support thoughtful and effective regulation, especially with the best interests of the investing client in mind."

Adam Antoniades, President, Cetera Financial Group

"Cetera has been aware of the broad brush strokes of the DOL rule for some time now, and we have been actively positioning our advisors to transition this situation from an obstacle to an opportunity. We have been utilizing our industry-leading scale and resources to develop multiple new tools and platforms to prepare our advisors for how to best operate their businesses and enjoy continued success in this new regulatory environment. Preliminarily, it appears the rule includes modifications that indicate the DOL has considered some of the industry's concerns. However, we will be studying the newly released details of the final rule in the coming days, and from there, we will announce a number of our initiatives to support advisors in this area in the coming weeks."

LPL Financial

"Upon initial review of the Department of Labor fiduciary rule, LPL Financial is pleased by what appears to be positive changes implemented in the rule and appreciates the Department of Labor's willingness to listen to concerns about protecting choice for investors. In particular, we are encouraged by the increased time frame for implementation, the ability to easily enter into the best interest contract with our existing clients, and the freedom to recommend any assets that are appropriate to help investors save for retirement … While our review is still in progress, with the rule in hand, we now have greater clarity and can begin quickly implementing solutions that will help investors retain access to the objective financial guidance they need. As a result of LPL's preparation over the past year, the firm has already announced several changes to position LPL and its advisors for growth by offering choice and flexibility to serve a range of investors seeking both ongoing and occasional advice. We look forward to introducing additional capabilities over time that will empower LPL advisors to support even more investors with this fundamental need."

Custodians

Charles Schwab

"We're in the process of thoroughly reviewing the final rule in order to fully understand its impact on RIAs, as well as on the retail (Individual Investor) side of our business. Generally, we have supported and continue to support the underlying principles of the rule. Investors should expect that the fees they pay for advice are reasonable and fully disclosed, and that the advice they get in return for those fees is in their best interest. At Schwab, whenever we provide personalized advice for a fee, we already do so in the capacity of a fiduciary."

Fidelity Investments

"Fidelity is focused on serving the best interests of its customers and clients. We support rules that protect and don't hinder workers saving for retirement. I'd also point out that Fidelity has a robust team of experts in place to assess, understand, and implement any required changes under the final rule. Lastly, we are doing everything we can to ensure our advisors do not lose access to the products and services they rely on to help their clients save for retirement."

Organizations

Rob Nichols, President and CEO, American Bankers Association

"Banks have a long history of helping customers save and prepare for retirement through IRAs, 401(k)s and other important products and services. For months, we have presented the DOL with ways to revise the rule to preserve the value of IRAs and 401(k)s for bank customers. We recognize the efforts that the DOL has made to address our concerns that the rule could make it harder for customers to continue to use these important bank services. We are hopeful that the revised language of the rule preserves banks' relationships with our customers. We will carefully review the final rule against bank practices and our customers' needs, and will continue to do everything we can to provide the financial services our customers seek."

Financial Planning Coalition

"The Financial Planning Coalition applauds the Department of Labor for its commitment to American investors and retirement savers. Based on our initial review, this rule, achieved through an inclusive, comprehensive review process, carefully balances needed consumer protections with preserved access to retirement advice. The end result is a rule that will help bring millions of Americans much closer to a secure, dignified retirement. We urge Congress not to harm American investors and retirement savers by dismantling this important consumer protection."

Dale Brown, President and CEO, Financial Services Institute

"Affordable, objective financial advice is a critical component to hard-working Americans' ability to save for a dignified retirement. The Department of Labor's two earlier proposals were complex and unworkable. As we have said since day one, there is no compelling evidence this rule is necessary to achieve a uniform fiduciary standard, and DOL's own analysis fails to make the case. We will spend the coming days thoroughly analyzing this rule to determine if it protects Main Street investors by preserving their access to affordable, objective financial advice delivered by their chosen financial advisor."

Cathy Weatherford, President and CEO, Insured Retirement Institute

"At a time when Americans are more responsible than ever for ensuring their financial security throughout retirement, there has never been a greater need for retirement income that cannot be outlived. President Obama and his Administration have long recognized the need to promote lifetime income, as stated by the White House Task Force on the Middle Class and evidenced by the Administration's efforts to facilitate access to lifetime income in workplace plans. Given this high level of support, we made it a point of emphasis to make the Administration and Department of Labor aware of how its fiduciary rule proposal would limit consumers' choices on retirement products including lifetime income strategies."

Karen Barr, CEO, Investment Adviser Association

"The IAA is pleased to see that the Department of Labor clearly recognizes that many advisers already commit to providing high-quality advice that always puts their client's best interest first. We have long believed that the fiduciary standard should be applied to all financial professionals giving investment advice. Our members, SEC-registered investment advisers, are already held to that standard. The IAA is also pleased to see that — based on preliminary information — the DOL appears to have taken many of our most significant concerns with the proposal into account. For example, the IAA and others commented that the proposal appeared to favor low-fee and low-cost — typically passively managed — investments over all else, ignoring returns, quality, and other factors that may be important to investors. The DOL expressly acknowledges that it did not adopt the low-fee streamlined option considered in the proposal because of that concern, and further clarified that the adviser is not required to recommend the lowest fee option if another investment is better for the client. These are welcome changes. We also welcome the DOL's clarifications on the timing of fiduciary status, as it appears that the final rule makes it clear that "hire me" discussions that do not include investment recommendations are not fiduciary recommendations.

Paul Schott Stevens, President and CEO, Investment Company Institute

"The final fiduciary rule will have a sweeping impact on how Americans save and plan for retirement. While we continue to believe that a 'best interest' standard should be applied through legislation, it is apparent that the Department of Labor has revised its proposal in numerous ways. We are reviewing those changes to see if they address our concerns about the unquestionable negative impact of the original proposal on retirement savers. The rule is lengthy and complex, so we need to carefully review and analyze its details to understand fully how it will affect mutual funds — the nation's most important retirement savings vehicles — and the millions of fund shareholders who rely on them."

Robert Kerzner, President and CEO, LIMRA, Loma and LL Global

"The Institute was established to offer relevant and insightful retirement research and education for every sector of the retirement market. We know this rule is a transformational event for our members and the industry and we want to help you respond to this new reality … Over the next weeks and months we will host several events, where industry leaders tasked with implementation can share their ideas and perspectives on the challenges created by the DOL fiduciary rule. These events will facilitate collaboration across the retirement market to find industry-wide solutions."

Michael Wong, Analyst, Morningstar Inc.

”Looking more closely at the potential winners, we still expect the rule to push more IRA accounts into fee-based structures, where costs become a much bigger consideration for the advisor or broker dealer, as they are compensated on the total value of the account. We expect this to be more of a boon for the two largest providers of low-cost exchange-traded funds — BlackRock and Vanguard — as well as for brokerages like Charles Schwab that have their own low-cost passive products on their networks. That said, with the low-fee streamlined option that was considered in the original DOL proposal not being adopted in the final rule, this shift will take place more gradually.”

Jules Gaudreau, President, National Association of Insurance and Financial Advisors

"We remain cautious, and it remains to be seen how the practical application of the rule will affect middle-market consumers who need retirement planning advice and services. But we are pleased to see, for example, that DOL has incorporated our suggestions on the effective date of the rule, grandfathering of existing clients, and timing of when signatures are required on best interest contracts … This is a crucial issue for us. There is a retirement crisis brewing in our country with large swaths of the population financially unprepared for the future. We need to find a way to continue to provide advice and support for those who are trying to ensure the financial security of their families."

Judith Shaw, President, North American Securities Administrator Association, and Maine Securities Administrator

"While supporting the Department's goal of enhancing the standard of care applicable to retirement investors, NASAA recognizes that the rule requires industry members to make changes to processes and systems. These changes will require regulators and industry members to work cooperatively toward the effective implementation of the rule including the continued servicing of smaller accounts. Less prosperous investors need not be abandoned if we work together toward a solution. As we closely review the final rule, NASAA will continue to advocate for additional regulatory initiatives to raise the standard of care for investors in general."

Jason C. Roberts, CEO, Pension Resource Institute, and Partner, Retirement Law Group

“Based upon our initial review, we believe that many of the challenges in the proposal have been modified to be more workable. We are sifting through the details but are generally encouraged — particularly with the lower bar for fee-based IRA rollovers and the extended timeline for implementation. We will be begin updating PRI's member firms next week and start developing the required forms, agreements, disclosures, policies and training in the coming months."

Kenneth E. Bentsen Jr., President and CEO, SIFMA

"As with the prior proposal, this final rule is voluminous and every word matters. It will take time to review the rule to determine its impact on investors and their ability to save for retirement. SIFMA has long supported a best interest standard for all advisors, yet we remain concerned that the DOL's rule could force significant changes to current relationships, which may leave clients without the help they need to prepare for retirement, at a time when we all agree that more can and should be done. While we continue to believe the Department's methodology is greatly flawed and lacking sufficient empirical basis, a poorly drafted rule could result in unnecessarily raising costs for investors while limiting their choice, a concern shared by many commentators and other regulators."

Roger W. Ferguson Jr., President and CEO, TIAA

"IRAs are a key part of creating retirement security, so we agree with the requirement that distribution advice be subject to the same fiduciary standard as all other investment advice. This will ensure that rollover discussions, including whether to roll over from an employer-sponsored plan to an IRA, are always in employees' and retirees' best interest … Based on our preliminary analysis, it appears the Department has gone a long way toward making the best interest standard the industry standard. TIAA supports this direction, and we look forward to reviewing the full rule."

Technology vendors

Andrei Cherny, CEO, Aspiration

"I've seen firsthand that the wheels of government can move slowly — especially when there are thousands of lobbyists and many millions in campaign contributions working against progress. But the new fiduciary role from the Department of Labor is a big step in the right direction. The financial industry is one of the least trusted in America — for some very good reasons. Too often, conflicts of interest lead to a "heads I win, tails you lose" game where people's very livelihoods are on the line. Frankly, today's rule does not go far enough. That's why we at Aspiration have a business model we call Pay What Is Fair: Our customers pay Aspiration only what they feel we deserve. They can even pay us nothing if they so choose. This way our customers know we're never conflicted and know we'll always give them our best advice."

Jon Stein, CEO, Betterment

"We're optimistic about the DOL's rule-making and what it represents. We built Betterment as an alternative to the conflicted, sales-driven business models that previously dominated the market for retirement advice. We applaud the DOL for finalizing the fiduciary rule, and for recognizing that an unconflicted approach will create better outcomes for investors."

Lincoln Ross, Executive Managing Director, Head of Product Strategy and Marketing, Envestnet

“Envestnet has always played a key role partnering with financial institutions and advisors. Due to our scale and capabilities we are uniquely positioned to support financial institutions and advisors in complying with the final DOL fiduciary rule.”

Aaron Klein, CEO, Riskalyze

"Think for a moment: All advisors must now act in the best interests of their clients. The suitability standard is gone, replaced by a fiduciary duty to do right by the investor. That's a landmark achievement.

The early drafts of the rule then attempted to legislate which products consumers could choose in which accounts, and lard up contracts with meaningless 300-page disclosures that consumers would never understand. The final rule is much more effective. If advisors want to recommend products with variable compensation instead of flat compensation, they will still have to prove that they are acting in a client's best interests, and they will be exposed to massive litigation risk if they fail to do so.

This simple approach is the epitome of what regulation should do: Establish a broad principle and allow the market to do its work. The market will drive a uniformity in commissions on these products, and the day of the 8% variable annuity is over. There is just no way that any financial services firm is going to try to claim those products are in the best interests of their clients  —  they'll lose their shorts defending an indefensible recommendation in court."

Advisers

Blair H. duQuesnay, Principal and Chief Investment Officer, ThirtyNorth Investments

"It's probably a watered-down version, but it's a step (baby step) in the right direction."

George Kinder, Founder of the Institute of Life Planning

"While this is a very welcome move by the Obama administration, it is still a long long way from the regulatory guidance that will restore trust to the financial services industry. Financial advice has to do with delivering freedom into client lives rather than organizing financial structures and selling products. It’s about the client. Fiduciary means placing the clients interests first, not advisers products and services. As long as industry power is on the sell side, so that regulations are adjusted and the language is corrupted keeping “advice” and “education” and “counseling” as terms that can be used by product companies and their sales people, a fiduciary standard will not hold, trust will not be restored, and the consumer will continue to be rightfully outraged and wrongfully abused.”

Triad Advisors

"We're in the process of reviewing the details of this recently finalized rule, but one thing is clear: Delivering maximum choice and flexibility in business and compensation models to independent advisors is more crucial than ever before. We're confident that our firm's focus since we were founded on supporting hybrid advisors uniquely positions Triad Advisors to best serve the evolving needs of independent advisors in this new regulatory landscape. We're also encouraged on a preliminary basis with modifications from previous versions of the rule in its final version, which seem to reflect the willingness of the DOL to listen to our industry and the investing public on a range of key issues."

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