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DOL Fiduciary News: September 1, 2016

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Moving Forward [fiduciary rule] 

Best's Review (September 1st, 2016 Issue) 

Winds of change are sweeping through the retirement advice industry. Propelled by a federal rule that makes most advice subject to new standards, and largely dismantles commission-based compensation, the broker/adviser market is experiencing a seismic upheaval.

Six years in the making, the U.S. Department of Labor's conflict of interest fiduciary rule, or more simply the fiduciary rule, was released earlier this year. Its premise is to ensure that advisers don't steer clients to high-cost/low-return investment vehicles.

"It is the most transformative regulatory change in the financial services industry in the last 40 years," said Kathy Milligan, senior vice president of LOMA's education and training division. "It will affect not only advisers, but also employees in a variety of roles, such as product development and service areas."

Texas Judge Denies All but 2 Briefs in DOL Fiduciary Hearing 

ThinkAdvisor; August 31, 2016

The federal judge overseeing the case in Texas against the Department of Labor’s fiduciary rule on Wednesday denied considering all but two of the eight amicus briefs filed in the court, allowing only the briefs filed by the Financial Planning Coalition and the American Association for Justice.

In rendering her decision (, District Judge Barbara M.G. Lynn stated that the Coalition’s motion should be granted because its proposed brief “provides a unique perspective” as the only filing party “representative of financial professionals in the United States already operating under a fiduciary standard.”

E-Signature Firm Predicts Mountains of Fiduciary Paperwork 

PLANADVISER; August 30, 2016

E-signature provider SIGNiX published a new analysis ( suggesting retirement plan services providers will face potentially tremendous new amounts of paperwork and disclosure under the Department of Labor (DOL) fiduciary rule taking effect next year.

If not tackled the right way, the seemingly trivial cost of managing new paperwork and data processing related to the fiduciary rule could quickly grow out of hand, the firm warns. Some of the burden may be eased by the fact that the DOL has allowed for certain amounts of bulk digital disclosures under the stricter fiduciary paradigm—but even the digital disclosures come along with strict requirements that will mandate careful monitoring, according to SIGNiX.

Will Fiduciary Rule Drive RIAs to BDs? 

ThinkAdvisor; August 31, 2016

Will the passage of the DOL’s fiduciary rule drive top-producing reps away from broker-dealers? We asked the 2016 Broker-Dealers of the Year about a shift to fee-only business.

Eric Schwartz, Cambridge Investment Research, Division IV: We've been heavily into fees for over 20 years. Forty percent of our business was fees, even 20 years ago. We've been dealing with the potential for some number of advisors to go fee‑only, or what I call quasi‑fee‑only, which would mean the broker-dealer gives 100% payout or near 100% on fees and just collects on the other side.

Historically, we lose one or two advisors like that every year. It's still a trickle, not a flood. The ones that do [leave] tend to be bigger. In the old days, somebody with $10 million or $20 million might form their own RIA and go fee‑only, but nowadays, because of the costs and the fact that you actually get audited and some of the difficulties of running your own RIA, we see it happening in $250 million to $500 million range.(

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