The professional standing of advisors should receive a boost from the Department of Labor's fiduciary rule, says Robert Johnson, president and CEO of the American College of Financial Services.
"This is a move that could very much professionalize an industry that very much needs it," says Johnson.
But he is also concerned about the potential unintended consequences of the DoL rule squeezing out the middle market for retirement benefit advice.
"My big worry is that people who need financial advice the most may not be getting it," Johnson says. The rule's impact on the cost effectiveness of an advisor's ability to provide retirement advice may lead to a robo advisor world, Johnson added.
"If a client doesn't have a human advisor, and he or she sees Jim Cramer on television yelling and screaming that the market is falling 10%, then they may get scared and sell out," he says. "That worries me, because it's clear that the biggest benefit financial advisors provide is counsel during turbulent times."
The pain for advisors may be temporary, however.
"There are a lot of smart people running firms, and they'll figure this out" Johnson points out. "If we truly want to make this a profession, and if [the rule] means more people have to become fiduciaries, then we're much better off."
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