You’re kidding me! The Department of Labor prevails in four law suits intended to overturn the Fiduciary Rule, yet the DOL itself is now likely to kill the Rule?
Yep, and that’s after the DOL spent years crafting the Fiduciary Rule given thousands of comments from supporters and opponents.
On February 3, President Trump ordered the DOL to conduct a review of the Rule, to assess whether it would limit investors’ access to investment advice, cause disruptions in the industry and increase litigation against financial firms—the essence of arguments federal courts have this year determined as “unpersuasive”.
How pathetic will it be for the DOL to now conclude, “Ooops! The Rule after all is a bad idea for the investing public”?
There’s a new Sheriff in town! And he’s the DOL’s boss!
The Fiduciary Rule does not preclude commissions being charged—excessive commissions, yes, but not commissions themselves. The Rule requires that brokers not make misleading statements, and that various disclosures be made about the compensation being earned. Is this such a bad thing? Sure, there’s paperwork involved to claim the exemption to charge commissions. Is the concern that the paperwork is cumbersome? Or would some brokers prefer to keep conflicted compensation a secret? All that regulatory paperwork can be eliminated if level compensation is charged. Obviously, many brokers are loathe to give up commissions.
Investment firms have a choice to make. And some are saying, “We’d rather fight the Rule requiring us to be fiduciaries.” NWCM made its decision nearly twenty years ago when we started our firm: “We’ll act in the best interests of our Clients.”
We understand the argument for rolling back regulations that unnecessarily stifle business development. But to kill a regulation that forces investment firms to act in the best interests of investors? These are financial products that will significantly impact investors’ ability to achieve their dreams and goals!
Is the baby about to be thrown out with the bath water?