Dal Fiduciary Rule Analysis

2003 Words 9 Pages
After Obama ruled in favor of the new Department of Labor (DOL) fiduciary rule, financial planners will no longer have their own interests in earning high-commissions and fees over their clients. The new rule is to protect advisor’s clients by adding a sense of transparency by making sure the advisor is acting within the best interest of the client, by recommending the best investments at the lowest prices.
Implementation of the new rule is set out to prevent the $17 billion a year in government claims by reducing the exorbitant fees associated with financial planners. However, this has caused a major disruption to all financial advisors and how they operate (currently) under less stringent standard that requires investment advice to be “suitable”.
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The DOL does not ban commissions or revenue sharing (the distribution of a portion of federal tax revenues to state and local governments). Although, it does require advisors who accept them have to have clients sign a best interest contract exemption (BICE). Raymond James and other broker-dealers are evaluating what the rule entails and how it will change firm’s platforms to meet the new requirements. Stated by Mr. Anderson of the SEI, “many advisors are not going to want to use the BICE because the perception issue it creates with clients. As a result, he predicts more brokers and hybrids will be joining the ranks of fee-only RIA’s.” Interestingly enough only larger firms will be able to switch to fee-based verses smaller firms who will have to use …show more content…
However, there are some measures I would put in place to protect myself from the more stringent regulations. First and foremost, I would ensure that I document all of the suggestions I give my clients, with detailed notes and data demonstrating my thought process. In order to protect my credibility as an advisor it is important that I demonstrate the rationale behind my advice, otherwise I may find myself in a situation where I am accused of making a suggestion for personal

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