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DOL Fiduciary News: December 21, 2016

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If Trump Wants to Kill DOL Rule, He’d Better Act Soon

ThinkAdvisor; December 19, 2016

This week, the U.S. Chamber of Commerce added to the welter of speculation over the Department of Labor’s fiduciary rule’s fate.

Chamber CEO Thomas Donohue said the organization is urging the incoming Trump administration’s transition team to undo the regulation. To date, the Trump administration hasn’t communicated its position on the rule.

Should the new administration heed the Chamber’s advice, the most efficient route for lawmakers and the new Labor Department may be delaying the April 10 implementation date, say experts.

401(k) Plan Specialists Basking Under DOL Rule

Financial Advisor; December 19, 2016

Boutique firms that specialize in employer retirement plans are set to benefit big time from the Department of Labor’s fiduciary rule.

That’s because many advisors who now dabble in the plan market are expected to exit the business due to the extra cost, paperwork and expertise required by the DOL rule. And in some cases, smaller brokerage firms will no longer support retirement plan business.

Bid to grow fiduciary registry gains prominent followers

Financial Planning; December 19 2016, 3:28pm EST

A prominent RIA firm is the first to announce it is joining a new registry of the strictest fiduciary firms in the country created by the Institute for the Fiduciary Standard.

Moisand Fitzgerald Tamayo is headed by Dan Moisand, a former FPA president who was also a CFP Board disciplinary official.

All firms on the new list, which launched over the summer, must abide by 12 best practice standards that minimize conflicts of interest. A recent study by the Institute for the Fiduciary Standard found that fewer than 20% of all RIAs potentially qualify for inclusion.

Death of DOL fiduciary rule could spur SEC action on uniform standard

InvestmentNews; Dec 20, 2016 @ 1:15 pm

Almost everyone is anticipating that the incoming Trump administration will try to kill — or at least delay — a Labor Department investment advice rule. If it does, it could be a catalyst for the Securities and Exchange Commission to finally break out of its stasis on the issue.

The conventional wisdom is that the Labor regulation, which requires financial advisers to act in the best interests of their clients in retirement accounts, is doomed, and that the SEC under a Republican majority will continue to leave untouched its authority to promulgate a fiduciary regulation applying to all retail investment advice.

But financial industry opponents for years have tried to stop the DOL rule by asserting that the SEC, not the DOL, is the primary securities regulator. It should go first, they say, with a regulation that imposes a uniform best-interest standard on brokers and investment advisers, raising the bar for brokers.

We could see a microcosm of the situation play out when a Republican Congress tries to end the Affordable Care Act. Killing it without replacing it could be politically untenable.

In the same way, if the DOL rule falls, it could be put up or shut up time for the SEC. A fiduciary vacuum would not be acceptable.

“The biggest issue [next year] is the fallout from the DOL rule being taken off the books,” said a former SEC official who asked not to be identified. “That's going to dictate what the commission does. There is going to be pressure on the SEC from the financial industry to fill the void.”

Industry groups are already saying it is not enough simply to quash the DOL rule, which they say is too complex and costly and will make giving and receiving investment advice much more expensive. 

A Review of How the Fiduciary Rule Could Affect Retirement Plan Sponsors

PLANSPONSOR.COM | December 20, 2016

Issuance of the final fiduciary rule, or conflict-of-interest rule, from the Department of Labor (DOL) has shaken up the advisory space, but plan sponsors are paying attention too, waiting to see how it will affect services from their providers and advisers.

DC Participant Experience Will Change Regardless of DOL Rule

PLANSPONSOR.COM | December 20, 2016

The market forces driving change in the retirement industry started before the Department of Labor (DOL) issued its final fiduciary rule and will continue, regardless of the effect of the rule by the new presidential administration, according to Broadridge research.

Broadridge identified three trends driving change in the retirement industry, including a shifting model of advice. Firms are shifting business models from commission-based fee structures to fee-for-service (or percentage of assets). Some of these trends were already under way, but they have been accelerated by the DOL Conflict of Interest Rule.

Broadridge also noted a trend toward passive investments and lower-cost funds. The general growth in exchange-traded funds (ETFs), combined with pressure on 12b-1 fees and the shifting of fund lineups and offerings, point toward retirement investors changing where they put their money. For instance, for the first three quarters of 2016, 80% of net new assets that flowed into funds went to passive versus active products. 

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