Years in the making, and after months of anticipation, the (delayed) applicability date of the fiduciary regulation arrives today. But for the vast majority of respondents to this week’s NAPA Net reader poll, it’s been “business as usual.”
Back in November, a slim plurality (32%) of NAPA Net reader poll respondents said they were expecting the Trump administration to delay and amend the regulation, while nearly as many (29%) thought they would delay it – permanently. Like many things since then, it seems fair to say it hasn’t worked out exactly as folks thought.
Well, for the vast majority (93%) of this week’s respondents, it’s been “business as usual,” although nearly 19% said they would be communicating with clients and around 2% said they were “still sorting through the details” (more than one response was allowed). One reader noted, “We have already been communicating all along and our house has been in order for years.”
Worry Points
Speaking of communication, asked to cite what they thought was the biggest worry about the fiduciary regulation, nearly a third (32%) said “client confusion,” just out-polling the 28% who responded “none to speak of.” Among the other concerns were:
- excessive litigation (19%);
- compliance monitoring (14%); and
- having to wait for clarity from the DOL review (7%).
Other concerns noted were “How service providers are responding,” “the need to raise costs to service small clients” and “the Trump administration could so loosen the exemption’s conditions that no practical enforcement remains.”
On that last point, we also asked readers what odds they gave the DOL review of the fiduciary regulation’s impact ordered by President Trump to have a major impact on the regulation. Turns out just over half (52%) put the odds of a big change at 50/50, though more than a third (35%) said the odds weren’t very good. Beyond that, the votes were pretty scattered, with 8% opining that it was not so much if as when, and another 5% determining that “it’s a certainty.”
One reader noted that change was already underway ahead of that review, noting the “useful changes to the BICE in light of the emergence of T shares.”
SEC ‘Stance’
As if there weren’t enough dust swirling around already, the new head of the SEC recently welcomed the Labor Department’s invitation to “engage constructively” as the SEC moves forward with its examination of the standards of conduct applicable to investment advisers and broker-dealers and related matters. We asked readers to evaluate the SEC’s “reengagement,” and:
- 43% said it's “long overdue”
- 23% said it's “just going to muck things up”
- 19% said it's “likely to slow things down”
- 15% said it's “not likely to actually amount to much”
One reader cautioned that “…involving the SEC sets up yet another opportunity for the fraudster banking, insurance, and securities businesses to lobby for rules that make it easy to harm consumer investors; and with the SEC, the problem of agency capture is much worse.”
Other Comments
We got a number of reader comments on the issue. Here’s a sampling:
“I have no problem with acting as a fiduciary in the best interests of my clients. However, this rule is deeply flawed and requiring customers to move to fees and not allowing fully disclosed transaction charges to continue in advisory accounts is just nonsensical. I expect the worst of the issues to be in my wealth management practice, not in my retirement plan practice.”
“We are trying to approach this new regulation as an opportunity. Similar to fee disclosure, we hope this new regulation will encourage our industry to be more transparent about how we get paid. As a firm, we have been operating as fiduciaries for our plan clients for many years. We hope these new regulations encourage only those advisors who are truly dedicated to retirement plans to stick around.”
“There needs to be more done to protect those advisors that are doing the ‘right thing’ for clients. It seems too easy to inadvertently get caught up in a technicality of the law.”
“It is business as usual for us. Just curious how it will affect our broker dealer.”
“Understanding its full impact is not going to be visible for a long time.”
“Still too many advisors that don’t fully understand how to operate as a fiduciary. They will continue to disrupt the marketplace by introducing knock-off products that don’t fully address the problem of giving conflict-free advice and getting participants on track to retirement.”
“The uncertainty will last long past January 1, 2018.”
“Even those who believe in a free market should know that it can’t protect a consumer investor from his foolishness in imagining that it’s possible to get advice from someone who is compensated by third persons.”
“I think it was Covey that said to ‘work with the end in mind.’ What tends to get lost in all this regulation are the good people who at the end of the day are just trying to help people/participants get to a place where they can retire in a dignified manner and are doing the right things. If you are doing the right thing, you and your employer should not be afraid to be a fiduciary...”
Thanks to everyone who participated in our weekly NAPA Net reader poll!
