Who Is Winning With the Fiduciary Rule? Wall Street

The brokerage business fiercely fought the new retirement advice rule. But so far for Wall Street, it has been a gift.

The rule requires brokers to act in the best interests of retirement savers, rather than sell products that are merely suitable but could make brokers more money. Financial firms decried the restriction, which began to take effect in June, as limiting consumer choice while raising their compliance costs and potential liability.

But adherence is proving a positive. Firms are pushing customers toward accounts that charge an annual fee on their assets, rather than commissions which can violate the rule, and such fee-based accounts have long been more lucrative for the industry. In earnings calls, executives are citing the Department of Labor rule, known varyingly as the DOL or fiduciary rule, as a boon.

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“They are crying crocodile tears,” said Phyllis Borzi, a former Obama administration official who was an architect of the rule, referring to complaints from financial firms on the rule. That administration had said conflicted advice was costing individuals $17 billion a year and 1% in annual returns, figures that critics dispute.

The full effect of the rule remains to be seen. It has only partially gone into effect, with the Trump administration considering significant changes, including adjustments designed to lower compliance costs. Earlier this week, the Labor Department proposed delaying the rule’s compliance deadline by 18 months, a move that experts say suggests revisions are in the offing.

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https://www.wsj.com/articles/who-is-winning-with-the-fiduciary-rule-wall-street-1502443804

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