We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (17,774)
  • Industry Conferences (3)
  • Industry Job Openings (3)
  • Moore on the Market (207)
  • Negative Media (139)
  • Positive Media (73)
  • Sheryl's Articles (656)
  • Wink's Articles (265)
  • Wink's Inside Story (238)
  • Wink's Press Releases (99)
  • Blog Archives

  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • May 2008
  • February 2008
  • August 2006
  • DOL Fiduciary Rule Winners and Losers

    April 3, 2017 by ThinkAdvisor

    As the Department of Labor at press time continued to grapple with whether to delay the effective date of its fiduciary rule (the consensus: a delay from the original April 10 date to June 9), industry players and lawmakers were busy telling Labor in comment letters why such a delay was warranted — or not.

    Editor’s note: On March 29, DOL sent to the Office of Management and Budget its final rule requesting a 60-day delay to the implementation date of its fiduciary rule. 

    While the jury is still out on the fiduciary rule’s ultimate form, industry observers agree that there will be definite winners and losers — be they products, industry players or consumers — post Labor‘s decision to either modify the fiduciary rule or eventually kill it.

    R. Alexander Acosta, President Donald Trump’s Labor Secretary nominee, appeared before the Senate Health, Education, Labor and Pensions Committee, which oversees Labor, for his confirmation hearing on March 22.

    Acosta said during the hearing that, if confirmed, he would follow Trump’s Feb. 3 directive to review the rule. “There is an executive action that directs how DOL will approach this [fiduciary] rule,” Acosta said in response to a question by Sen. Elizabeth Warren, D-Mass. Warren queried Acosta on whether, if confirmed before the 60-day request to delay the rule is finalized, he would “promise to stop” the delay.

    Said Acosta: “I […] support following executive actions from the president, who will be my boss.”

    Warren probed further, asking Acosta, “Generally, do you support this [fidcuary] rule? Do you think this rule is a good idea?”

    Acosta replied: “With respect, the rule goes far beyond simply addressing the standard of conduct [of] an investment advisor.”

    Sen. Lamar Alexander, chairman of the HELP Committee, said in his opening remarks at Acosta’s hearing that the Obama administration issued “130% more final rules” than the previous administration’s Labor Department, citing the fiduciary rule, which he said “makes it more expensive for the average worker to access investment advice.”

    Acosta noted during his testimony the executive order issued by Trump that “each Cabinet officer must review all rules and make determinations if they should be revised.” DOL “has been ordered to review all rules.”

    During that review, “high on the list will be to protect workers with appropriate rules,” he said.

    Acosta added: “We would enforce all rules that are in affect pending that review” of rules ordered by Trump.

    When queried on his overall “big picture” view of regulation, Acosta replied that Trump “has ordered that we eliminate regulations that are not serving a meaningful purpose,” adding that “we need to free up small business” in order to create jobs.

    Acosta was introduced during the hearing by fellow Cuban-Americans, Sens. Marco Rubio, R-Fla., and Ted Cruz, R-Texas. Rubio called Acosta a “brilliant, brilliant legal mind with a deep knowledge of labor issues.”

    Cruz, who attended law school with Acosta and has known him for 25 years, cited Acosta’s academic accomplishments but noted that he’s also “a man of character, who takes very serious fidelity to the law and to the Constitution and has a passion for justice.”

    A speedy confirmation process was anticipated, as an executive session was to be scheduled for committee members to vote on Acosta’s nomination a week after his confirmation hearing.

    Editor’s Note: The Senate Health, Education, Labor and Pensions Committee voted 12-11 on Thursday to support Acosta’s nomination to be the next secretary of Labor.

    So which products and players will be the fiduciary winners and losers?

    FIRST UP, THE COURTS

    Opponents who have challenged the rule in the courts continued their war, though they continue to lose legal battles. The most recent blow to opponents came March 21 when the judge overseeing the case in Texas brought by nine plaintiffs — including the U.S. Chamber of Commerce, SIFMA and FSI — denied their emergency request to block the rule’s original April 10 effective date.

    The plaintiffs asked Judge Barbara M.G. Lynn to stop the rule from taking effect while they take their case to the U.S. Court of Appeals for the Fifth Circuit. But Lynn, who already denied their original bid to block the rule, argued in her mid-March ruling that the court “has already found plaintiffs’ position on the merits unpersuasive, two other district courts have reached the same conclusion in similar cases, and neither court has enjoined enforcement of the rules.”

    Duane Thompson, senior policy advisor at fi360, noted that if Labor does decide to kill the rule, “I think the seven-year debate [over the rule] has moved out of industry circles into the mainstream to a certain extent. Fiduciary is not yet a household term, but is certainly growing in awareness.”

    Arjun Saxena, financial services partner at PwC’s consulting business, sees the “secular trend” of independent broker-dealer consolidation continuing whether the fiduciary rule remains intact or not. “We see a bunch of players in the independent broker-dealer space and retail broker-dealers feeling the squeeze and being forced into consolidation, like insurance brokerages — it’s a secular trend,” Saxena said.

    Ultimate losers on the product front include higher-cost share classes and 12b-1 fees as well as [fixed] indexed and variable annuities, Thompson opined, with Saxena adding that while the number of mutual funds will continue to dwindle, new share classes will be available.

    Even if the fiduciary rule is repealed, wealth managers continue to “prune their fund list,” Saxena said.

    Edelman talks to ThinkAdvisor about investing in “exponential” technologies and why commission-based brokers are doomed, regardless of the fate of…

    THE SHARE CLASS ISSUE

    The new “T” mutual fund share class “has a uniform front-end load and 12b-1 structure across fund families,” Saxena said, noting that the share class was created by asset managers “specifically to make it easier for [brokerage firms] to offer mutual funds within commission-based transactional retirement accounts, within the constraints” of the BIC exemption.

    However, he said, “introducing these onto their mutual fund platforms requires some proactive effort by the [brokerage firms] to onboard new CUSIPs to their fund platforms, changes to their billing systems, advisor training, etc.” Also, “some manufacturers have not added this share class to their offerings.”

    Adopting the “T” share class would, he said, “cause some negative revenue impact to [brokerage firms] and to advisors, though the figure is less than what the headline differences in front-end loads would suggest.”

    Furthermore, voiding the DOL rule and the BICE requirements would mean advisors “handling retirement accounts under a brokerage construct would not be deemed ERISA fiduciaries, and their conduct would continue to be governed by suitability requirements.” Thus, he said, it is unlikely that “we would see much uptake for the new ‘T’ share class by [brokerage firms] or by advisors.”

    If the rule moves ahead, “advisors will be deemed ERISA fiduciaries for any and all retirement accounts where they are ‘providing advice,’ and specific rule requirements (for example, right of private action) increase the risk for potential lawsuits,” he said.

    So registered reps “will look for tools that allow them to continue serving those clients at acceptable economics, while containing the compliance risk.”

    A ROBO-ADVICE SOLUTION?

    Digital advice capabilities, Saxena suggested, would offer a way for brokerage firms to serve low AUM retirement clients by allowing them to deliver individualized advice in a scalable and economically viable way.

    Jon Stein, founder and CEO of Betterment, told Labor in a comment letter that the “positive changes” in the investment industry since the rule’s passage, “such as reductions in fund fees and changes to conflicted service models,” could disappear if the rule is “watered down” or delayed. “For the benefit of the millions of Americans saving for retirement,” Stein said Labor should allow the fiduciary rule to go into effect in April.

    In his comment letter, Financial Engines CIO Christopher Jones told Labor that investors would be the losers if it failed to maintain “strong protections to ensure that all Americans have access to unconflicted investment advice.”

    With more than 92 million individual investors now responsible for managing their own retirement assets, Jones wrote, “there has never been greater demand for high-quality investment advice.”

    In a statement released by the Financial Services Institute, CEO Dale Brown argued that Labor’s March 1 decision to delay the rule was a “critical step in protecting retirement savers’ access to advice, products and services. […] We will continue to work with the administration, and through the legal process, to repeal and replace this rule.”

    Originally Posted at ThinkAdvisor on April 3, 2017 by ThinkAdvisor.

    Categories: Industry Articles
    currency