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DOL Fiduciary News: October 12, 2017

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Top aide to Sen. Hatch tapped to head EBSA; October 11, 2017

Preston Rutledge, senior tax and benefits counsel on the Senate Finance Committee and a top aide to Sen. Orin Hatch, R-UT, will be tapped to head the Employee Benefits Security Administration, according to a report in Politico Pro.

Rutledge has served on the Finance Committee since 2011. He spent the previous decade as a tax law specialist at the IRS, according to his LinkedIn page.

The head of EBSA serves as the Assistant Secretary of Labor, a presidentially appointed sub-cabinet level position that requires a Senate confirmation.

As head of EBSA, Rutledge would be instrumental in drafting revisions to the fiduciary rule.

401(k) referrals rare from wealth managers despite DOL fiduciary rule

InvestmentNews (blog); Oct 11, 2017 @ 5:50 pm

Conventional wisdom is that the Department of Labor's conflict-of-interest rule would result in a flood of referrals from wealth management advisers and other less-specialized retirement plan advisers to retirement-plan specialists.

Beware of conventional wisdom. Though 401(k) referrals are likely to increase, there are still many obstacles, especially for advisers within independent broker-dealers.

I caught up with Bill Beardsley, newly minted retirement chief at independent broker-dealer LPL Financial, who said LPL encourages 401(k) referrals, especially between the "emerging" plan advisers and "elite" advisers, who do very little else other than 401(k) business. However, he acknowledged a few challenges:

  • Independent broker-dealers stop short of mandating how their advisers conduct business, other than for compliance reasons.
  • Wealth management advisers who stumbled into 401(k) relationships are more likely to seek help from a wholesaler at a record-keeping firm than risk their relationships by introducing another adviser.
  • Experienced plan advisers have moved up market and don't view small plans as economically attractive, especially if they have to share fees.


BD and wirehouse ‘dinosaurs’ fighting for survival

Financial Planning; October 10 2017, 1:32pm EDT

Broker-dealers have seen the writing on the wall — adapt to the changing industry or risk extinction, according to a new report from Cerulli Associates.

Amid vanishing commission-based revenue due to the fiduciary rule and competitive threats from RIAs, broker-dealers can only survive by embracing advisory services and new technology, says the study, released last week by the Boston-based consulting and research firm.

Financial Planning reviewed a summary of the report: “Saving the Dinosaurs: Industry Trends Threaten U.S. Broker-Dealer Structure.” The changes to the industry make the original business model of big IBDs such as LPL Financial and Cetera Financial Group, and wirehouse firms like Morgan Stanley “potentially irrelevant,” the study says.

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