The Trump administration's dramatic series of rapid-fire executive orders and regulatory announcements and reviews purport to delay, perhaps gut or even ultimately kill the Department of Labor’s fiduciary rule. But a recent analysis suggests that the genie may be out of the bottle regardless.In a recent post, “Turning Back the Clock on Fiduciary,” On Wall Street senior editor Andrew Welsch argues that the Trump administration’s hostility to the rule may be too late to stop a greater trend. “The environment has changed over the past year,” writes Welsch.
For instance, he notes, Ameriprise, Betterment and Merrill Lynch have already made sizable investments in complying with the rule and publicizing that they have done so. Not only that, Welsch says, “The regulation even penetrated pop culture; comedian John Oliver dedicated an episode of his weekly HBO show last year to its benefits.” And the rule has taken root among clients as well, Welsch argues, observing that “more clients are now asking for lower fees, greater transparency and a higher standard of care.”
Broader trends militate against a return to the way things were, Welsch suggests, such as the need to be competitive. He cites comments by Dynasty Financial Partners CEO Shirl Penney, who remarked, that “The world is becoming more informed and the big firms are finding more ways to muddy the water.”
The atmosphere has changed to such a degree, argues Welsch, that delaying, altering or killing the rule may not spell a return to pre-rule business as usual. “Regardless of what happens in Washington, every executive contacted by Financial Planning before and after Trump's action said that they would keep many, if not all, the changes they've been implementing,” Welsch says, adding, “Firms have been lowering fees, increasing transparency and making multimillion dollar investments in revamped platforms and new technologies, chiefly around communications and supervision.”
And some firms, Welsch notes, have embraced the rule wholeheartedly. He cites HighTower CEO Elliot Weissbluth: “Believing in a fiduciary standard was embedded in our very DNA. We were designed to embrace a fiduciary duty. We are culturally, commercially aligned with the rule.” In fact, said Weissbluth, his firm started making such changes before the rule was even promulgated: “If you go back and look at our marketing materials in 2008, we have been consistently on this message from day one. We believe in a fiduciary duty and we believe it in a very simple and unambiguous fashion.”
“The bigger issue for us is that there are macro trends requiring a transformation,” Cetera Financial Group President Adam Antoniades said, adding, “Whether it’s under the fiduciary rule [or not], we are going to continue down that path.”
John Iekel is Senior Writer at NTSA and editor of The 403(b) Advisor and the NTSA website.