Reader Poll: Liking the Litigation, But…

We now have five separate lawsuits filed in three different venues challenging the fiduciary regulation. What do NAPA Net readers think of this development?

Most seemed glad to see the challenges – just under one in five said, “It’s about time,” though 43% of survey respondents said they were “glad to see it happen, but don’t think it will matter.”

More than a quarter (29%) thought it was a waste of time and effort, while the rest hadn’t yet made up their minds.

Will it Matter?

Not that even the “fans” of the litigation thought it would amount to much; just over 60% said that it would be “a momentary distraction at most, with no impact on implementation,” and another 4% thought it would have no impact at all.

Just over one in five (21%) thought the court will stop implementation while it considers the matter – and that could be enough to kill it. One reader commented, “We desperately need a sensible rule; this time-out may lead to one.” Another held out hope that “the main question of what is the DOL doing in this will be addressed.”

The remaining 15% weren’t sure of the impact.

As one reader noted, “A lot of money will be spent, ‘the sky is falling’ hysteria will ensue and in the end the regulation or some version of it will stand. This industry survived ERISA, PPA, 408(b)(2) and it will survive this too.” “It makes us look like we don’t want to do what is in the best interest of the client in the first place,” explained another.

Or, as one reader noted, “Think we’ll see some advisors with 2-3 plans getting out of the business.”

Change in Preparations?

Nor did respondents see much change in their firms’ preparations to comply with the regulation; 80% split nearly equally between “too soon to say” and a simple “no” that it wouldn’t have an impact. The rest said they weren’t sure.

As you might expect, this week’s question engendered a lot of comments. Here’s a sampling:

  • “From what I can tell, it looks like those filing the suits have little understanding of where the line is on providing someone something they need and understand, versus making a sale by whatever means necessary. DOL isn’t banning the ability to make a sale; they’re demanding that financial professionals provide quality assistance to the client to result in the client making well-informed decisions with their retirement assets. I can’t see where being transparent and forthright does anything but increase someone’s chance of making more sales in the future. I hope the regulation gets implemented as-is!”
  • “First, let’s call a spade a spade. Notwithstanding all the lip service to the contrary, at the end of the day, what many leaders within the financial services industry really want is a disclosure-based, faux fiduciary standard, not a real fiduciary standard. Second, the amount of misinformation being disseminated/recycled by so-called financial professionals within the reader comment sections of some of the trade journals is astounding. Bottom line: the original DOL fiduciary regulations have been leaking like a sieve for decades — as a consequence, for far too long the industry has been allowed to have its cake and eat it too. Had the industry not intentionally sought to blur the line between salespeople and advisers, much (if not all) of the current angst could have been easily avoided.”
  • “I have lost hope of an objective judiciary above the political fray. I think there are legitimate concerns about the DOL exceeding its statutory authority regarding its back door foray to regulating IRAs and I think it is overreaching to conclude that distributions out of an ERISA plan should have fiduciary implications.”
  • “After researching the 401K market place provider structure I think the regulations are long overdue and the issues we are seeing are reminiscent of the investment advisor and hedge fund space 30 years ago. Record keepers are a SPOF (single point of failure), record keeping is on a settlement date basis, not trade date. There is a bunch of complexity built in to avoid having fiduciary duty and doing what is in the best interests of participants. Some of the fees charged for services and products are outrageous and how these products trade primarily by record keepers is a violation of the principals of best execution, etc.”
  • “Regulation usually results when someone or some group has been behaving badly. If there truly was a level playing field, there would be a lot less regulation in everything.”
  • “These regulations are another example of the over reach of the federal government and at least should have been coordinated with fiduciary regulations for non-retirement investments.”
  • “This is the tip of the iceberg. If it’s not stopped now, it will just get bigger.”
  • “I’d like to hear more about the SEC’s efforts in this area. If the regulation and the SEC’s work are targeted at the same issue, i.e. best interests of those receiving advice, a future reconciliation of the two might occur at some point in the future. Or has the SEC dropped the project?”
  • “I find it hard to believe that people are willing to fight for the ‘right’ to be thieves and give conflicted advice. THIS is why people hate Wall Street…”
  • “It has been proven over time that you cannot legislate or regulate morality; bad guys/girls will still be bad under this rule. There are strong rules on the books now; let’s enforce them. This new rule only costs more, but does not solve the problem. A better use of the DOL prowess would have been an education campaign for the public, paid for and distributed by the industry… a genuine public/private partnership for the benefit of all.”

Thanks to everyone who participated in our weekly reader poll!

Got a question you’d like to run by the readership? Looking to get a sense of the industry? Email me at, or post it in the comments section below.

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