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DOL Fiduciary News: September 6, 2017

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Sen. Warren: Firms Don’t Need DOL Rule Delay. Just Ask Their CEOs

ThinkAdvisor; September 5, 2017

A week after the Labor Department filed to begin a 15-day comment period regarding the 18-month delay of its fiduciary rule’s most onerous provisions, Sen. Elizabeth Warren, D-Mass., is urging Labor Secretary Alexander Acosta to fully implement the rule in light of recent remarks by financial and insurance company CEOs.

In her Tuesday letter to Acosta, Warren cites recent earnings calls in which the CEOs state they are “prepared to comply with the rule in its current form and that many believe it to be in the best interests of their customers.”

Warren also told Securities and Exchange Commission Chairman Jay Clayton in a separate letter the same day to “review this evidence” as the SEC solicits public comment on Labor’s rule as well as a potential uniform fiduciary rule of its own.

The letter details comments from more than a dozen executives made in earnings calls after Labor’s impartial conduct standards took hold on June 9.

DOL Rule Delay May Save the Day: Half of Advisors Unprepared

Financial Advisor; September 5, 2017

As the U.S. Department of Labor proposes another delay to mull its fiduciary rule ahead of enforcement, unprepared advisors may be temporarily off the hook.

That’s a good thing, according to recent research from Boston-based wealth management consultants Practical Perspectives, as most advisors in a recent survey feel less-than prepared for the rule’s onset.

According to “Financial Advisors and Implementation of the DOL Fiduciary Rule – 2017,” a recent Practical Perspectives research report, fewer than half of advisors feel like they’re well prepared to handle the implementation of the fiduciary rule, according to the report.

The fiduciary rule’s invisible boost

Financial Planning (column); September 05 2017, 10:17am EDT

By Michael Kitces

While the Department of Labor’s fiduciary rule has generated no shortage of discussion centered around advisors and their clients, an under-acknowledged secondary shift merits attention too. Although portions of the regulation may be diminished amid an ongoing review by the Trump administration, it will still affect actively managed mutual funds and their performance —in a surprisingly positive way.

If an advisor can make the case for active management, there’s nothing wrong with using actively managed funds. And as broker-dealers shift to being compensated by levelized commissions outside of the funds — even if the consumer still pays a 1% fee via the broker-dealer equivalent to the 1% trail in a C share — the mutual fund itself will no longer have to count the broker’s compensation against his/her own performance.

This very important secondary effect of the rule will emerge slowly over the next couple of years; it won’t light the world on fire at once. But the improving performance of actively managed mutual funds will be no less real.

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