"We still have an opportunity to shape the fiduciary landscape," said Robert Cirrotti, managing director at BNY Mellon's Pershing Wednesday in Orlando as part of the custodian's annual INSITE conference. "It's really important that we don't grow weary of the standard of care issue, because we have an opportunity to take the lead."
In April, the SEC introduced an investment-advice reform package that is now open for public comment until Aug. 7. One of the proposed rules is Regulation Best Interest, which would require brokers to act in the best interests of their clients.
The SEC's move came soon after the 5th Circuit Court of Appeals vacated the Labor Department's fiduciary rule, which requires brokers to act in the best interests of their clients in retirement accounts.
Blaine Aikin, executive chairman of Fi360, a fiduciary education, training and technology company, told advisers the SEC's proposed rule is very much a work in progress. It will likely be another 12 months before the final rule takes shape, he said.
"Under the best circumstances, after the deadline for comments, there will be a reassurance of the proposed rule, another comment period is most likely, and then further revisions," he said.
Meanwhile, the DOL rule, which Mr. Aikin described as "the walking dead," is still in effect. Parts of that rule will likely be incorporated into the SEC's version of the rule.
"You can still rely on the best-interest contract exemption, but scratch out the contract," he said.
"You might even see the DOL come back and resurrect the rule," he added.
If there's any certainty, it's that the "regulatory landscape will remain uncertain for a period of time, and litigation is increasing, particularly for advisers working on the retirement side," said Mr. Aikin.
Both panelists agreed the current regulatory environment with regard to fiduciary responsibility is an opportunity for financial advisers to leverage their reputation.
"Now is the time to refocus from regulation to your reputation," Mr. Aikin said. "That will contribute to the market value of your firm, because for advisers virtually everything is based on trust."
Mr. Cirrotti echoed that sentiment, "Forget about the DOL rule and the SEC for the moment, and think about how you want to run your business," he said.