Fiduciary rule final stand: ‘Please rethink this’

July 25, 2017 2:48 PM

EDITOR'S NOTE – The comments below were culled from the Department of Labor’s public database. Following a news report casting doubt on the authenticity of some comments about the fiduciary rule Financial Planning independently verified each one appearing in the piece. Some comments were removed from the original post because they did not offer enough contact information to confirm them with the writer.

The future of the fiduciary rule is up for grabs, again, and clients, advisers and firms are jumping in to make their voices heard at a crucial moment.

Via a public commentary board, the Department of Labor is hearing feedback on whether it should make changes to the fiduciary rule and delay the regulation's second stage of implementation.

Though the Labor Department has previously hosted similar comment periods, this one stands out because the stakes are so high. The remaining components of the regulation are scheduled to go into effect Jan. 1. After years of effort, fiduciary supporters are making one last push to get over the goal line. Opponents, meanwhile, see a chance to reverse their momentum.

Scroll through to see some of the most passionate and insightful comments filed thus far.

To read advisers' previous feedback to the Labor Department, click here.

Gary Duell (adviser)

I voluntarily submitted to a fiduciary standard 10 years ago, before it was either fashionable or required. My comment is simple: the most efficient and effective way to protect investors is to educate them. Layers and layers of disclosure requirements simply hassle honest advisers and fail to impede dishonest ones. But the internet is a great equalizer for investors; they can compare fees, drill down into fund expenses and verify the licensing and enforcement history of their advisers.

I say scrap the whole DoL botched regulatory attempt and let the market decide who gives what kind of advice to whom and in what circumstances. Fiduciaries will win in the end, without enriching trial lawyers at the expense of their clients and the advisory community as well, which will be the primary result of the DoL rules.

Ed Ulledalen (adviser)

This rule is making it difficult to impossible to serve small and starting investors. Please rethink this. Here are a couple of ideas:

1) Raise the threshold for the DoL rule to $500,000.

2) Leave the more stringent requirements in place for larger rollovers for older investors, i.e. $1,000,000 + for investors over age 60.

3) Just say no to complicated products that should not be in IRAs, such as indexed annuities and illiquid real estate investments.

David Lutz (adviser)

The way I see it is you honestly don’t need a new 1,023 page confusing [regulation] which is putting policies in place that limits choices, [and] increases costs and frustration. A fiduciary duty is already on the books. Just make everyone become a CFP. The CFP Board will enforce the fiduciary standard which it always has and the problem is solved.

Steve Harter (investor)

I got ripped off by an adviser years ago. Plain lied about risk of a security.

The fiduciary rule aims to stop the losses savers incur when steered into products that earn advisers commissions and fees. Conflicted advice costs retirement savers $17 billion each year. It’s vital that the Labor Department implement and enforce the rule in its current form. I urge the Department of Labor not to water down the fiduciary rule’s enforcement provisions and not to create massive loopholes in this common-sense protection for current and future retirees.

Mike Zapf (investor)

I want the rule to be enforced on behalf of all U.S. citizens who are consumers of financial products.

I am a long-time investor. One only needs to occasionally read the WSJ to see where financial workers are often charged with wrongdoing. Perhaps there are others that don't get caught. Protect the savings of many to deny the few who are greedy.

Adam Griffin (adviser)

The biggest issue with this regulation as I see it is I can no longer work with clients who have modest sums of money (under $150,000). I have made the choice because of this regulation to exit the brokerage space altogether and work only in an advisory capacity. I had to act as a fiduciary already in that capacity, and to me it simply isn’t worth it to take on smaller accounts and potentially run afoul of the new rule even though I didn’t intend to. My interpretation of this rule is that it is very difficult to justify recommending a mutual fund with a front end sales load at all. There will always be a no load alternative out there, with less cost and comparable performance history. Because of this, even if someone with modest assets desires professional guidance and more comprehensive financial planning I have to turn them away. It simply isn’t worth the risk.

Alan Scheff (adviser)

There is no way I, as a highly experienced adviser, am going to take on fiduciary responsibility risk with a small ERISA type account. The smaller investor will no longer get the benefit of my 37 years of experience. In fact, there are a lot of senior advisers that are considering retiring because of these onerous regulations that do nothing to help the little guy.

Any adviser that is reputable and puts the client first does not need the government telling them how to treat people. If you do a good job for folks your business will grow. The last thing a professional financial adviser needs is an army of lawyers lying in wait to take them to court when their stock goes down.