RIAs say DOL rule delay doesn’t matter because industry is moving toward fiduciary anyway

Independent financial advisers are generally shrugging off the Department of Labor’s 60-day delay of its fiduciary duty regulation, suggesting that the proverbial horse is already out of the barn.

“The delay is just delaying the inevitable,” said Shawn Blau, managing member at ATR Advisors.

“Irrespective of the DOL, the industry is moving toward requiring a fiduciary standard,” he added. “Long term, the trend is toward more fiduciary requirements.”

Registered investment advisers that already act as fiduciaries have largely benefited from the year-long debate and legal wrangling over the status of the rule, which was originally written to require fiduciary standards for any financial professional giving advice on retirement accounts.

Delaying the enactment of the first stages of the rule to June 9 from April 10 is “disappointing,” according to Carolyn McClanahan, founder and director of financial planning at Life Planning Partners.

“For our firm, it means nothing because we are already fiduciaries, but as an industry, I hate that we can’t come to an agreement to act as a fiduciary for our clients,” she added.

On whether the rule will eventually become law, Ms. McClanahan said, “I’m not hopeful, given the current administration. But one of the things I’ve learned about Washington is you never know what’s going to happen until after it has happened.”

Jordan Waxman, managing partner at HSW Advisors at HighTower, also doesn’t believe the rule will impact the way he already works as a fiduciary, but he is not optimistic about the future of the DOL rule.

“I’m a pragmatist, and my sense is that the rule will ultimately be repealed,” he said. “You will see a whole bunch more comments and support for this delay, and my hunch is that the rule gets killed in January of next year.”

Meanwhile, Mr. Waxman shares a broader industry perspective that the general idea of fiduciary responsibility is already on its way to becoming a mainstream concept, regardless of what regulators and politicians decide.

“The dialogue around fiduciary status has certainly increased,” he said. “Not everybody knows about fiduciary, but more people are talking about it.”

Like the way it has been since the rule was first unveiled a year ago, many RIAs are sitting back and watching the show, while using every opportunity to promote their own fiduciary status.

“We weren’t worried that we’d have to change the way we provide advice,” said Peter Lazaroff, co-chief investment officer at Plancorp.

“The law was written by people who don’t give financial advice, but once you understand the difference between fiduciary and suitability standards, why would anybody want to work with somebody under a suitability arrangement?” he added. “I personally would like to see the rule go beyond retirement advice, and separate that from people who are just selling products.”