1 National Association of Certified Financial Fiduciaries


DOL Rule Still the Top Regulatory Concern for Advisors

DOL Rule Still the Top Regulatory Concern for Advisors

By Rita Raagas De Ramos January 24, 2018

The Department of Labor’s fiduciary rule remains the top regulatory concern of financial advisors for 2018, even if its new full implementation date is 18 months away.


Until the DOL rule is fully implemented on July 1, 2019 -- barring any changes to that date following an ongoing review -- retirement advisors are working on compliance requirements for the transition period. During the transition period, retirement advisors who expect to make use of the Best Interest Contract Exemption are required to comply only with so-called Impartial Conduct Standards, which state that BICE users must "adhere to basic fiduciary norms and standards of fair dealing." Specifically, advisors must charge no more than reasonable compensation, avoid making materially misleading statements, and provide advice that is in the investor’s best interest.

For many advisors, the uncertainty of what the final DOL rule for retirement advisors will look like, whether the SEC will indeed produce its own version of a fiduciary rule for all advisors, or any other developments that could take place in the interim, are of great concern because of the potential impact on their practices.

"I would say the most important regulatory development we are monitoring is the DOL fiduciary rule. We don’t know whether the DOL will make changes to the rule during the review it intends to conduct between now and July 2019," says Dennis Stanek Jr., a Hartford, Conn.-based advisor at RBC Wealth Management. "It may be the case that the rule remains exactly as originally written and currently in force."

Stanek says RBC Wealth Management has expanded training programs for advisors, and it continues to enhance the tools and products advisors need to meet their obligations.

"The primary concern we and others in the industry previously raised about the rule was whether it introduces unnecessary complexity that may make it difficult for investors to obtain the financial services important to them," he says. "Over the coming months we will evaluate any changes the DOL may make, so we can provide our clients with the best possible products and services afforded under the regulation."

Bryan Sullivan, the San Luis Obispo, Calif.-based CEO and co-founder of WealthSource Partners, says there are many unanswered questions about how to be compliant with the DOL rule, but his main concern is how the fiduciary rule will impact his firm’s relationship with clients.

"In general, we’re concerned that the rule could cause expenses around retirement accounts to increase. We’re committed to 100% compliance but there is still so much that’s unclear or undecided on how this will play out," he says. "I’m afraid that the fiduciary rule in its latest iteration will create an environment that actually harms the individual investor. I believe that it will ultimately cause fees to go up for clients and that it will open doors for robo services or do-it-yourself services, which don’t provide true advice for people that need it."

Sullivan also worries about ambiguity when it comes to the interpretation of the compliance requirements of the fiduciary rule.

"We’ll do everything we need to be compliant with whatever version of fiduciary rule ends up being the law of the land. The problem is the regulatory powers do a terrible job of helping firms understand what it is that they want, and so you end up with 100 different versions of what it means to be compliant," he says. "Ultimately, best practices will evolve and the industry will adapt, but over the next several years I see a lot of confusion and large expenses being paid for all of us to figure this out."

With talk of the SEC entering the fiduciary requirement picture, Shirl Penney, New York-based president and CEO of Dynasty Financial Partners, says the industry needs clarity on the direction of the fiduciary standard and who will be responsible for oversight, and advisors want to understand what will be required of them. The SEC could be voting on a proposal for its own version of the fiduciary rule by the second quarter of this year.


Dennis Stanek


The potential for a uniform fiduciary standard and the pressure to act as fiduciaries are among the top regulatory developments identified by around 400 broker-dealer advisors surveyed by Ignites Research as those that would have the most impact on their practices. According to the preliminary findings from a survey conducted in the fourth quarter of 2017, around 70% of the broker-dealer advisors cited the potential for a uniform fiduciary standard and around 54% cited the pressure to act as fiduciaries.

Norm Cook, Columbus, Ohio-based president and chief marketing officer of Halite Partners, says the DOL rule isn’t expected to have a significant impact on the firm, founded in June 2017, because it has already been acting as a fiduciary to its clients. But the participation of the SEC and state insurance regulators in the fiduciary discussion would have a significant impact on the firm if their involvement results in a universal fiduciary requirement.

At the Sifma annual conference in Washington, D.C. in October last year, SEC chairman Jay Clayton said he doesn’t want to pursue a uniform fiduciary standard across the industry, reasoning that there are different business models that apply to the way investor money is managed and that investors should be able to retain their freedom to choose their financial professionals. He said, however, his views are his own and do not necessarily reflect the views of the SEC.

"The idea that there’s a silver bullet … that solves all of this, I think, is not something to pursue," he said at the time. "And the reason I say that is you can’t deliver everything that everyone would want. Some investors want a different relationship, a different standard."

Clayton said it is important to preserve the existence of various business models and investor choice when crafting fiduciary rules.

All fiduciaries are not the same. CFF is the standard of Excellence.