Skip to content

DOL Fiduciary News: October 16, 2017

Please Note:

These links will take you directly to the homepage of the website that features the article.

To reach the article directly, copy and paste the article title into the search feature on the homepage of the publication website.

'Fee Only' Compensation Can Have Conflicts Too, Says FPA

Financial Advisor; October 13, 2017

Every financial advisory compensation model has conflicts, despite the fact that “fee only” is often promoted as conflict-free, says Financial Planning Association President Shannon J. Pike.

Advisors promote themselves as “fee only” because it is seen as a “better” compensation method in the industry, whether that is a flat fee, a monthly or yearly retainer, or some other model. But charging fees, rather than commissions on products sold, does not eliminate conflicts, FPA leaders told members of the press at the FPA annual conference in Nashville, Tenn.

“The way an advisor is paid should not be the only factor a prospective client goes by when looking for an advisor,” Pike says. “A consumer can consider it, but it should not be the starting point.”

Any business compensation model is legitimate, and any model, from commission to a percentage of assets under management to a flat fee, can have conflicts. A flat fee could have a conflict because the advisor is paid the same no matter how much work he or she does. An AUM model means the advisor is paid less if the client spends money or pays off debt, explains Evelyn Zohlen, the FPA’s 2018 president-elect. 

PANC 2017: The New Conflict of Interest

PLANADVISER | October 13, 2017

Speaking on the second day of the 2017 PLANADVISER National Conference in Orlando, Donald Stone, executive director, Pavilion Advisory Group, warned that there are many easy fiduciary hurdles to get tripped up by in the evolving regulatory landscape.

“The Department of Labor (DOL) has long been concerned about the fiduciary rule reform issue, and it has gotten tougher on this issue,” Stone observed. “As we all know by now, the department wants to provide a better set of guideposts for advisers and brokers to follow to minimize and disclose conflicts.”

Alice Palmer, managing counsel for Nationwide, agreed with that high-level assessment. Complicating the matter is the fact that the Trump Administration has signaled it wants to reverse the fiduciary rule expansion led by DOL, but it has so far not actually done so.

“And so it can be difficult to know where we stand,” Palmer observed. “In a sense, the tougher fiduciary rule reforms are in effect, but there is this ongoing delay in full enforcement. Overall, it’s very muddy, where we are right now.”

Trump Names New EBSA Chief to Replace Borzi

ThinkAdvisor; October 13, 2017

The Trump administration said Friday that it has nominated Preston Rutledge as head of the Labor Department’s Employee Benefits Security Administration, filling the spot held by Phyllis Borzi, the architect of the fiduciary rule, during the Obama administration.

If confirmed, Rutledge will be instrumental in shepherding through any change that Labor makes to its fiduciary rule. He currently serves as senior tax and benefits counsel for Senate Finance Committee Chairman Orrin Hatch, R-Utah. 

Did you accomplish the goal of your visit to our site?

Yes No