‘Phase 2’ of DOL Rule Is Dead: Brian Hamburger
December 11, 2017 by Melanie Waddell
“Phase 2” of the Labor Department’s fiduciary rule is “dead,” Brian Hamburger, CEO of the regulatory consulting firm MarketCounsel, said during his opening remarks Tuesday at the firm’s annual summit in Miami Beach.
Hamburger told the 500 advisor attendees that “we’re going to table” addressing Labor’s fiduciary rule until next year’s MarketCounsel Summit, noting that in the recently finalized 18-month delay, the rule’s “most critical aspects have been tabled, and that may spell the end of the rule.”
In the interim, the Securities and Exchange Commission, he continued, can “finally take on the [fiduciary] issue itself.”
In comments to reporters during a Tuesday media briefing, Hamburger noted that “there will continue to be ramifications” from the fiduciary rule as “Phase 1” of the rule is “alive and well. But the real major issues with respect to the DOL fiduciary rule are the Phase 2 issues,” which have been delayed. “In Washington, you know that the longer something stays on the vine the more susceptible it is to get picked off.”
Labor has “continually announced that they aren’t going to expend resources towards enforcement” of the rule, he continued. “The SEC, ironically, is expending resources towards the enforcement by way of examination, which is odd because they had the chance to be involved in the initial rulemaking well before the DOL, and they passed upon it. I’m hopeful that the SEC will resume a leadership position within the industry, and will take a real interest in the fiduciary issue and it will relegate the DOL’s interest to be negligible if anything at all.”
The SEC should take an interest in the fiduciary issue because “this all started as an investor confusion problem. I think that’s been lost here in the tug of war between brokers and advisors. If we’re going to be smart about this, it has to start and end with the analysis from the investors’ perspective. And investors are continually confused.”
Broker Protocol Defections
Hamburger also noted other issues tabled for deep discussion at the 2017 Summit, which were health care and tax reform, as they still remain in flux, but turned to current hot topics like defections from the broker protocol as well as business continuity and cybersecurity issues.
“We’re seeing the unraveling of the broker protocol — make no mistake about it,” Hamburger said during his opening remarks. “We have to advance the conversation beyond the protocol.”
He also noted the importance of advisors having business continuity plans. “How long have we talked about business continuity?” he asked attendees. “Forever.”
But even with a business continuity rulemaking in place “most advisors continue to give it short shrift,” he added.
As to the recent exits from the Protocol for Broker Recruiting, Hamburger said during that media briefing that he believes “the broker protocol will continue to have a profound impact on our industry. And I think we’ll continue to see firms exit the protocol, chief among them Merrill Lynch at some point in time, despite what [the firm] just said” Tuesday, that it’s staying put.