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DOL fiduciary rule up in the air

Broker Dealer changes coming regardless of how things play out with the fiduciary rule

In a recent article in Investment News “DOL fiduciary rule changes not one size fits all” Jodie Papike writes that there is a great deal of uncertainty around the DOL fiduciary rule. Several of the larger broker dealers have expended a significant amount of resources preparing for changes and are not going to stop momentum even if there are continued postponements to the rule.

The concern from most advisors we hear from is that they don’t know where their broker dealer stands on several areas that have the potential to greatly impact their practice. With so much change happening, advisors worry their firm is either over reacting to the rule or that they are not prepared enough.

Jodie writes-

“Now more than ever, it’s challenging for advisers to asses whether their broker-dealer is a good fit or if potential changes will disrupt their business to the point where they are forced to make a move. In almost every conversation I have had with advisers over the past year and a half, uncertainty about how their firm is handling the DOL rule has come up. Advisors worry their broker-dealer is overreacting to the rule and implementing changes that will dramatically affect the structure of their practice in a time frame they feel is not reasonable. On the opposite side of the spectrum, there is concern from advisors that their firm isn’t being proactive enough and that they are not educated on how they should be positioning their practice going forward.”

There are several changes that select broker dealers will be making no matter when or if the DOL fiduciary rule gets implemented. A good example of this change is in forcing movement away from directly held assets. Direct business is one of the areas that some firms are either not allowing anymore or are changing compensation to the point that advisors won’t do that business anymore.

Jodie writes-

“Some broker dealers are forcing this change because of what they feel is a lack of control when assets are off their platform. Their interpretation of the DOL rule solidifies this fear.”

“On the flip side of this argument is the adviser who enjoys the simplistic, straightforward ability to do direct business away from brokerage accounts. For many advisers, this shift in policy is pressing them to either change their way of doing business or analyze whether their current broker-dealer is a good fit for them.”


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