The ABC’s of the DOL fiduciary rule
Confusion could be the rule’s greatest by-product due to its broad and somewhat general nature
Jul 12, 2016 @ 1:00 am | By Anthony Domino, Jr. | Investment News
A casual reading of any financial publication recently is certain to have a headline featuring three letters: D – O – L. What they are referring to is the U. S. Department of Labor Conflict of Interest Rule, popularly referred to as the fiduciary rule. The culmination of a long tussle between regulators and professional advisers who engage in retirement planning — the final version has seemingly not satisfied either camp. Nonetheless, the most concerned — financial advisers and the companies they represent — will do what is needed to adapt while some final maneuverings remain.
The amount of investor assets accumulated in retirement plans is significant — $6 trillion, according to recent Cerulli & Associates research. Add another $3 trillion in individual retirement accounts, and that’s a total of $9 trillion. Sounds like a lot, but when spread over the 245 million adult Americans, it is a less than impressive $36,750 per capita. Such a large market is certain to garner attention, and with that attention comes a certain amount of noise — and with noise comes confusion.
The final rule, as published, is 1,023 pages. Overall, it broadens the definition of a fiduciary to anyone who receives direct or indirect compensation for providing advice to retirement plans, plan participants or beneficiaries and IRA owners. Advice is characterized as a recommendation intended to result in action.
The Blue Vault Summit could not have been more perfectly timed. This gathering of the Broker Dealer and Sponsor communities provided insightful and open discussion from several vantage points. These conversations are paramount, especially in a time of significant regulatory change.