InvestmentNews Editorials

Bright side of the new DOL fiduciary rule: Tech and efficiency

Rule likely to unleash a wave of software upgrades and business relationships that will result in greater efficiencies for advisory practices

Apr 24, 2016 @ 12:01 am

Well, it's finally happening. The Labor Department's fiduciary rule has landed, and the effects of the historic final rule announced April 6 are starting to ripple through the financial advisory industry.

But for all the bellyaching surrounding the new financial regulation because of the disruption it will cause to adviser and broker compensation, the specter of higher overall business costs and reduced investment options, and so on and so forth, there's an emerging silver lining. In the technology space, the rule is likely to unleash a wave of software upgrades and business relationships that will result in greater efficiencies for advisory practices throughout the country — and presumably better client service for years to come.

Still a skeptic? Take a closer look at the independent broker-dealer space, where the rule's footprint already has manifested itself in a notable partnership. LPL Financial, the largest organization of independent financial advisers in the nation, has pivoted to a new partner, BlackRock Inc., the world's largest asset manager, for assistance in paving the way to its first robo-advice platform.

(Related: The fiduciary rule covered from every angle)


As InvestmentNews technology reporter Alessandra Malito noted in her report last week, LPL had been eyeing a robo-offering for some time but was looking for the right fit — or perhaps the right moment.

Jon Ulin, managing principal of Ulin & Co. Wealth Management, an affiliate of LPL, says the move comes at a good time, in the wake of the DOL rule, which requires all advisers to act in their clients' best interests on retirement accounts.


“With the new DOL regulations pushing financial advisers to focus more on utilizing 'fee-based' investment platforms in retirement accounts, I am looking forward to having access to the new LPL robo-platform,” Mr. Ulin said.

LPL will integrate FutureAdvisor, which BlackRock acquired last summer, on its custodial dashboard, providing access to the firm's model investment portfolios as well as data aggregation, portfolio management and a client portal.

“Members of the financial services community believe that digital, especially digital together with the relationships and value an adviser already provides to clients, is the wave of the future,” Bo Lu, CEO of FutureAdvisor, told InvestmentNews.

The LPL news was quickly followed by word that MoneyGuidePro — the popular Internet-based financial planning program for advisers offered by tech developer PIEtech Inc. — had released its latest generation of software to align with the DOL rule.


“The DOL may have unintentionally made financial planning critical, as advisers now must defend that their recommendations were in the client's best interest,” Kevin Knull, president of PIEtech, said during an interview at the company's office in Powhatan, Va.

As the first waves of change and technology adaptation lap the shores of the broader industry, the moves by LPL and PIEtech's MoneyGuidePro are telling. Forward-thinking firms already have made their business decisions, set solid plans in place or are making other strategic moves to stay ahead of the changes that will result from the DOL rule's adoption. The much-debated rule provides a great opportunity for all brokers and advisers to gain an edge on rivals who may be too slow off the mark to survive the bigger changes to come.

With each week, the industry is seeing how the new standards are prompting advisers to live up to the raised bar for retirement advice. And the industry and investing public should be all the better for it.


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