We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (21,155)
  • Industry Conferences (2)
  • Industry Job Openings (35)
  • Moore on the Market (414)
  • Negative Media (144)
  • Positive Media (73)
  • Sheryl's Articles (800)
  • Wink's Articles (353)
  • Wink's Inside Story (274)
  • Wink's Press Releases (123)
  • Blog Archives

  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • September 2008
  • May 2008
  • February 2008
  • August 2006
  • What to Watch on the Fiduciary Front in 2018

    January 9, 2018 by Lisa Beilfuss

    The federal rule meant to protect retirement savers from conflicted advice was dealt a setback in 2017 as its full implementation was delayed. But consumers, state regulators and parts of the advisory industry have embraced its ideal of requiring retirement advice to be in investors’ best interest.

    The Obama-era regulation known as the fiduciary rule has been unpopular with Republicans and some financial-industry executives who say it harms consumers by reducing choice and access to financial advice. Shortly after his inauguration, President Donald Trump directed the Labor Department to conduct a new economic analysis of the retirement-savings regulation with an eye toward its revision or repeal.

    “We think it is a bad rule. It is a bad rule for consumers,” said White House National Economic Council Director Gary Cohn in an interview with The Wall Street Journal at the time. “This is like putting only healthy food on the menu, because unhealthy food tastes good but you still shouldn’t eat it because you might die younger.”

    In March, the Labor Department officially delayed the regulation’s originally planned effective date by 60 days, to June 9, as it launched its review. But new Labor Secretary Alexander Acosta concluded that “respect for the rule of law” precluded further delay.

    The Labor Department did, however, delay key parts of the fiduciary rule until July 2019 as it accepts public comment and re-examines the rule’s economic impact. That process is continuing, but a Wall Street Journal analysis has found a significant number of fake negative comments posted to the Labor Department’s website. A spokesman for the agency told the Journal that it removes fraudulent comments brought to its attention.

    Here are a few things to watch in 2018 as consumer awareness grows, the wealth-management industry adapts and regulators react:

    Industry Buy-In

    As of June 9, stewards of retirement savings have been required to put clients’ interests before their own. But while the best-interest standard went into effect, the delay in key provisions of the rule—including a best-interest contract and certain client disclosures—effectively makes it unenforceable.

    “It’s the rule of law, but it’s very hard for plaintiffs’ lawyers to even bring a lawsuit” without those provisions, said Erin Sweeney, an attorney at Miller & Chevalier Chartered who counsels firms regarding fiduciary obligations.

    Even so, many firms have made changes to how they do business in order to more easily comply with the new rule.

    Bank of America Corp.’s Merrill Lynch has embraced the rule, running an ad campaign around the idea of fiduciary advice. Rival Morgan Stanley has allowed brokers to continue charging commissions, but it has lowered costs to aid compliance with the regulation’s “reasonable compensation” standard. Many firms have rolled out new computer-driven “robo” advisory tools—with low costs and automated investment services—to cater to smaller savers.

    So far, adherence is proving lucrative as firms push customers toward accounts that charge a steady, annual fee on their assets, rather than variable commissions that can violate the rule and fluctuate along with market activity. Executives in recent quarters have credited the fiduciary rule for pushing up revenue. Merrill Lynch in its latest quarter said money put into fee-based accounts more than doubled. At Morgan Stanley, money put into fee accounts grew by two-thirds in the most recent quarter.

     

    The fiduciary rule also has been underpinning a trend of traditional brokers leaving Wall Street firms in favor of independent shops, known as registered investment advisers, that have been held to a fiduciary standard on all assets for decades. Being an RIA alleviates incentives to sell certain types of products and presents a marketing opportunity as investors become increasingly aware of the differences between brokers and advisers.

    “Fee-based, fiduciary models are the fastest growing areas of the industry,” JMP Securities LLC managing director Devin Ryan said. By 2020, research firm Cerulli Associates predicts that independent advisers will control more assets than Merrill Lynch, Morgan Stanley, UBS Group AG and other major brokerages combined.

    States Step In

    With the fate of the federal fiduciary rule in question, a number of states have moved to bolster their rules governing financial advice. The governors of Nevada and Connecticut signed bills to expand or amplify “fiduciary” requirements for brokers, while legislators in New York, New Jersey and Massachusetts have introduced similar bills.

    Several other states, including California, have indicated interest in exploring such requirements, and a bipartisan group of 13 state treasurers wrote to Mr. Acosta, urging him to preserve the “common-sense measure.”

    “This is a mobilization based on concerns that the DOL rule may be unhinged,” Ms. Sweeney said.

    Observers have said Nevada is a test case, because its rule could expand the reach of fiduciary obligations to all investment assets and not just tax-advantaged retirement assets. The state’s securities division is writing the regulation and has said it would conduct a public hearing as part of that process after Jan. 1.

    Industry groups have responded. In October, for example, a representative for the Securities Industry and Financial Markets Association, an industry trade group, expressed concern about a state-by-state approach to broker regulation and argued that any new fiduciary duties under Nevada’s law would violate an act of Congress passed 20 years ago to prevent patchwork regulation in financial markets.

    Riding Point on the Review

    Preston Rutledge, former senior tax and benefits counsel for the Senate Finance Committee, on Dec. 21 received full Senate confirmation as assistant secretary of labor for the Employee Benefits Security Administration. Mr. Rutledge takes on the job vacated by Phyllis Borzi, one of the architects of the fiduciary rule who left the agency at the end of President Barack Obama’s term.

     

    Ms. Sweeney said a takeaway from Mr. Rutledge’s confirmation hearing is that he would like to see more cooperation between the Labor Department and other agencies when it comes to the fiduciary rule.

    During his confirmation hearing before the Senate Committee on Health, Education, Labor and Pensions, Mr. Rutledge was asked about an earlier expression of “discomfort” with the fiduciary rule. In response, he said: “It wasn’t about the rule; it was about the fact that Treasury didn’t seem to be involved. Treasury ought to at least be at the table if this rule was going to create additional work for them.” (Violations of the fiduciary rule would trigger Treasury Department involvement via the Internal Revenue Service.)

    While a finalized rule may not come before 2019, Ms. Sweeney said a new regulation—which would then be subject to public comment and potential revision—could come by the fourth quarter of 2018.

    With Mr. Rutledge now installed, she said, “he’ll start to pull all the threads together and get this rolled up.”

    Universal Fiduciary Rule?

    While it remains unclear how the fiduciary-rule review will play out, observers say commentary out of the Labor Department and Securities and Exchange Commission suggest an increased likelihood that the SEC participates in crafting a standard that applies to both retirement and non-retirement assets.

    The SEC largely stayed on the sidelines of the issue during the Obama administration. But the regulator, now led by Chairman Jay Clayton, is showing new interest. “I believe an updated assessment of the current regulatory framework, the current state of the market for retail investment advice, and market trends is important to the commission’s ability to evaluate the range of potential regulatory actions,” Mr. Clayton said in June, when the SEC solicited feedback on a potential rule.

    Arjun Saxena, a partner at consulting firm PwC, said a new Labor Department rule isn’t likely to be finalized before 2019 and to “expect more time as opposed to less” if the agency coordinates with the SEC. “Anything from the SEC would be more complex,” he said, because it would cover all investment accounts.

    Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

    Originally Posted at The Wall Street on December 29, 2017 by Lisa Beilfuss.

    Categories: Industry Articles
    currency