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DOL Fiduciary News: April 19, 2017

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Banks Rack up Advisory Fees as Fiduciary Rule’s Future Hangs

The Wall Street Journal; April 18, 2017 7:02 p.m. ET

An Obama-era retirement-savings rule is in limbo, but investors already are pouring their retirement savings into brokerages’ promise of conflict-free financial advice in exchange for a fee.

Bank of America Corp.’s global wealth unit, which includes the “thundering herd” brokerage force of Merrill Lynch, gained a record $29.2 billion in new fee-based assets in the first quarter, the bank said Tuesday. J.P. Morgan Chase & Co. said last week that $8 billion of new assets flowed into long-term products, including those that charge a recurring fee.

Also on Tuesday, private-equity firms Stone Point Capital LLC and KKR & Co. agreed to acquire a majority stake in Focus Financial Partners, a New York-based investment firm that backs independent financial advisers who charge fees and pledge to minimize conflicts, in a $2 billion deal.

Even Fiduciary Champions Push DOL to Change Rule

ThinkAdvisor; April 18, 2017

Industry trade groups and lawmakers are urging the Department of Labor to revise, revoke or further delay its fiduciary rule — even the Investment Adviser Association.

Comments continued to flood into Labor on Monday, the last day of the comment period issued by Labor on President Donald Trump’s request that the Department review the rule in its entirety and consider revising the rule or rescinding it.

IAA, which represents advisors registered with the Securities and Exchange Commission and has lobbied in favor of the rule, told Labor in its 10-page comment letter that the fiduciary rule and exemptions, as interpreted by the department, “will have significant, unwarranted — and, in some cases, unintended — consequences for advisors that are already ERISA fiduciaries because the rule applies to pre-contract and sales discussions with prospective clients.”

Fee Pressure, Consolidation Aren't Over Yet for Asset Managers | Apr 18, 2017

The mutual fund industry is currently facing two headwinds: the Department of Labor’s fiduciary rule and the shift to lower-cost passive vehicles, both of which are causing fee pressure on managers, said Neil Hennessy, CEO of Hennessy Advisors, a publicly traded investment manager. That will continue the consolidation trend among managers as firms seek greater scale.

“It’s my belief that in the next year to year and a half, there’s going to be a lot more M&A activity. You’re going to grow through acquisitions or you’re going to get acquired,” Hennessy said, during a webinar sponsored by SunStar Strategic.

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