Top RIA Compliance News Articles for the Week of December 31, 2016

1. Why Advisors Benefit if the DOL Rule is Repealed (Author- Bob Veres, Advisor Perspectives)

Industry guru Bob Veres writes that when surveying subscribers to his Inside Information newsletter about the pending DOL fiduciary rule he’s been surprised by their responses. Veres writes, “most of my newsletter subscribers are already fiduciaries, and I was expecting them to be big fans of a rule that expanded fiduciary requirements. I was surprised to discover that they actually have a lot of negative feelings about the DOL rule.” Veres buckets advisor reactions into two categories. The first is that they already operate as fiduciaries and resent that the government may be mandating how to operate as a fiduciary. Or second, advisors already operating as fiduciaries worry the new DOL rule could eliminate a clear competitive advantage. Ultimately, Veres concludes that “the fee-only advisors I’m talking with in my Inside Information audience think we’re about to get the best of all worlds: a rule which lays down a standard, a lot of publicity around the fiduciary distinction, the elimination of the rule (and the paperwork the rule entails), more publicity around the fiduciary distinction, and the opportunity to keep that distinction as a marketing advantage.”

2. As the Calendar Turns, Whither the Fiduciary Rule? (Author- John Iekel, NAPA Net)

The outcome of the Department of Labor’s (DOL) fiduciary rule remains a highly debated RIA industry topic. Various opinions on the rule are being discussed and what the future will hold for the long awaited rule. President-elect Donald Trump has yet to state an opinion on the rule, however one of his key advisors has vocally expressed a negative viewpoint on the rule. John Iekel brings us this article where he includes expert insights from the likes of Michael Kitces and Jason Roberts on what the rule’s fate may be as well as who, in particular, the rule will impact.

3. Financial Advice is a Thicket of Conflicts. Wall Street Wants to Keep it That Way. (Author- Benjamin P. Edwards, The Washington Post)

Benjamin P. Edwards, a professor at the Barry University School of Law, pens this controversial op-ed arguing that “Republicans concerned about excessive regulation and red tape should embrace a clean ban on commission compensation. It might not make investing great again, but it would at least make it fairer for the little guy.” Edwards cites, Anthony Scaramucci, a member of President-elect Donald Trump’s transition team, that has openly voiced a negative opinion toward the DOL fiduciary rule. Edwards believes Scaramucci and the Trump team should consider “market-focused solutions.” Furthermore, Edwards argues that, “to be sure, Scaramucci and others may worry that banning commission-based compensation might dissuade financial advisers from servicing smaller accounts. This fear is unwarranted.”

4. Selling Fiduciary: A Prototype for Independent RIAs (Author- Bob Clark, Think Advisor)
   

Moisand Fitzgerald Tamayo’s (“MFT”) managing partner, Dan Moisand, reveals to Bob Clark that more and more clients have been asking about a “fiduciary duty” and what it exactly means to give financial advice in a client’s best interest. The Institute for the Fiduciary Standard’s new Best Practices Affirmation Program has been introduced and MFT was one of the first firms to join the initiative. Clark writes that, “to explain the best practices and his firm’s approach to taking care of its clients, Moisand created a video for the firm’s website described as ‘how we show our undivided loyalty to our clients.'” Clark ultimately concludes that he believes the video compiled by Moisand and MFT is “the best example that I’ve seen for how to explain and ‘sell’ a fiduciary duty to one’s clients.”

5. Trump’s SEC Pick Seen Unlikely to Advance Fiduciary Standard (Author- Kenneth Corbin, Financial Planning)

Jay Clayton is President-elect Donald Trump’s nominee to be the next chairman of the SEC. He is widely expected to be confirmed by the Senate without much difficulty. Kenneth Corbin writes that Clayton is likely to “scale back enforcement activity and unlikely to race toward major new rulemakings.” Bill Singer, a securities attorney who runs the Broke and Broker blog, anticipates that Clayton is also unlikely to advance a uniform fiduciary standard. While Clayton’s corporate background is well-established, Corbin notes there is little evidence that he will make an effort to increase action on issues that are of most concern regarding SEC RIA examinations. 

Don’t forget to check out last week’s top RIA compliance news articles on future government regulatory policy, the emergence of more virtual advisory firms, and the DOL fiduciary rule. Be sure to check back next Friday for next week’s top articles!