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DOL Fiduciary News: January 11, 2018

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Court decision on DOL fiduciary rule expected in February

InvestmentNews; Jan 10, 2018 @ 2:56 pm

A major court decision could be released on a lawsuit over the Labor Department's fiduciary rule after the partying is over next month on the Bayou.

Opponents and advocates of the regulation have been waiting for months for the Fifth Circuit Court of Appeals in New Orleans to issue its opinion. The court held a hearing last summer. The lead plaintiff in the case, the U.S. Chamber of Commerce, asked for a decision by last month.

"I've been told that New Orleans takes Mardi Gras pretty seriously, so we should expect a decision to follow that," David Hirschmann, Chamber senior vice president and head of its Center for Capital Markets Competitiveness, said on the sidelines of the organization's State of Business event Wednesday in Washington. Mardi Gras falls on Feb. 13 this year.

The case is the highest-profile suit of several against the DOL rule because it involves the leading industry opponents to the regulation. In addition to the Chamber, plaintiffs include the Securities Industry and Financial Markets Association, the Financial Services Institute, the American Council of Life Insurers and the Financial Services Roundtable.

House GOP Guns For DOL Fiduciary Rule

Financial Advisor; January 10, 2018

GOP leaders, fresh off their tax reform victory, are banking on Washington’s anti-regulation climate to help them pass a rider in a House spending bill that would completely vacate the U.S. Department of Labor’s fiduciary rule.

The rider to kill the rule has been attached to spending bills for several years, but it’s been successfully struck down by Democrats. There is conjecture among some pundits and lobbyists, however, that this year could be different.

“This is more of an uphill climb to keep the retirement saver protection in place this year because of the regulatory climate,” said Maureen Thompson, the vice president of public policy at the CFP Board of Standards.

Longtime fiduciary advocate Knut Rostad agrees that there is a greater chance now than in years past that a rider could strike down the DOL rule.

“In this climate, I would not bet against it, unfortunately,” Rostad said.

Advisers at Leading Discount Brokers Win Bonuses to Push Higher-Priced Products

The Wall Street Journal; Jan. 10, 2018 12:08 p.m. ET

Investors who seek advice from discount brokerage firms might assume the counsel they get is impartial, given how these firms have rejected the old Wall Street model of working on commissions.

In fact, advisers at some of the biggest discount brokerage firms make more money if they steer clients toward more-expensive products, according to disclosures from the firms and people who used to work at them. That means customers could end up with investment products and services that are costlier than they need.

“Clients hear the representative doesn’t work on commissions, and they think that means a rep doesn’t work on incentives,” said Jeff Weeks, former manager of a Fidelity Investments branch in Austin, Texas. “You’re omitting certain facts that the client would probably appreciate understanding before you launch into a sales pitch on why you think this product is better.”

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