DOL Fiduciary Rule: Better than a poke in the eye with a sharp stick

Everyone has their own way of celebrating or remembering significant dates throughout their lives - birthdates, anniversaries, historical events - some more significant than others.

For example, I should never forget my wife's birthday or our wedding anniversary date (sidebar - notice I used the words "should" and "date" - keeping track of the exact number is not guaranteed). Her birthday is July 11th (7/11) and we were married on August 11th (8/11). Back to back months. 7-11 and 8-11. Easy peasy. 

Anyways, eight days ago, April 6th, 2016, was a day of anticipation for many in the financial services industry. The Department of Labor was set to announce the final ruling regarding the new Fiduciary Rule. 

Would it be as memorable and significant as other events that also occurred on April 6th throughout history?

  • 1917: The US entered World War I by declaring war on Germany
  • 1973: Roberto Clemente's baseball jersey is retired with the Pittsburgh Pirates. He perished in a plane crash 4-months prior, en-route to Nicaragua to help in the relief efforts after an earthquake
  • 1982: Minnesota Twins host the largest crowd ever to watch a baseball game with 52,279 people watching the first official game in the newly minted Hubert H. Humphrey Metrodome

Well, I guess that depends on where you stand on the issue. Many advocates for the proposed ruling, myself included, were a bit deflated - the final ruling seemed to be watered down, underwhelming, and inconsistent with the original proposal.

A majority of those in opposition of the proposed fiduciary ruling - saying it would be costly and unworkable - were all smiles with the concessions the DOL took on many of their issues. 

It's still too early to tell what the long term impact will be within the industry as a whole and there is bound to be more explanation or refinement to the ruling as lawsuits start to pop up against the new rule. 

For some, this is going to have a huge impact - will the index annuity sales person continue to solicit customers and their retirement accounts? That action would hold them to a fiduciary-like standard and would have to be able to prove that recommendation is in the client's best interest. 

The good news for you is that, contrary to what you may read or listen to, there is an entire cohort of financial advice professionals that have been committed to putting a client's interest first before it was cool - I wouldn't go so far as to say these are the hipsters of financial advice, but it's close.

For starters, the pioneer of the fee-only movement is NAPFA, the National Association of Personal Financial Advisors - conflict free, non-proprietary financial advice since their inception in 1983.

Additionally, game-changers and visionaries with an entrepreneurial drive, have helped build a coast-to-coast network of advisors - XY Planning Network - that are delivering affordable financial advice to businesses and individuals in a way that leverages the power of technology and a passion to educate...not the crack of a whip from a sales manager bent on hitting the months sales-quota.

Not as significant as entering the first World War nor as much fun as watching baseball indoors during the spring in Minnesota, but April 6th, 2016 was definitely memorable in it's own right. 

Here are my favorite commentaries/summaries/blogs on the new DOL ruling that you will find helpful:

Barry Ritholtz, "The Big Picture" - Top 10 Phrases from Bank Lobbyists and Their Translation

Michael Kitces, "Nerd's Eye View" - Advisor’s Guide To DoL Fiduciary And The New Best Interests Contract (BIC) Requirement

Department of Labor - Best Interest Contract Exemption

J.D. Carlson, "A New Way to Four01k" - The Shortest Fiduciary Rule Summary Ever 

Corey Purkat