Many financial advisors are used to dealing with celebrities, but being cited in public by name by the president is a different category altogether.

Yet for those who work in the independent planning channel, it wasn’t entirely surprising to hear President Obama laud low-cost planning pioneer Sheryl Garrett when he threw his support last year behind efforts to impose a government-mandated fiduciary standard on planners who work with retirement accounts.

“There are a whole lot of financial advisors out there who do put their clients’ interests first,” Obama said in January 2015. “The folks like financial advisor Sheryl Garrett. … Sheryl says, ‘The role of a financial advisor is one of the most important jobs. But there is a segment of the industry today that operates like the gun slingers of the Wild West.’ I couldn’t have said it better myself, which is why I quoted you,” Obama said.

It took 15 months since that event for the Department of Labor to finalize and announce the details of the fiduciary standard.

I asked Garrett, the founder of the fiduciary-minded, low-fee Garrett Planning Network that currently has 250 planner affiliates across the country, to weigh in on some of the controversial elements of the new regulations, such as the lack of a potential ban on high-fee products, as well as what impact the standard will have after it is fully implemented and how her firm might change in the years to come.

‘FIDUCIARY DUTY CANNOT BE DISCLOSED AWAY’

The rule on “notorious high-fee products,” such as nontraded REITs and some annuities, makes “perfect sense to me,” Garrett said, “although it wasn't immediately obvious. Actually, I think it's brilliant. The rule need not dictate what investments or strategies may be in the client's best interest, or what compensation structures are permitted. The overlay of principles-based fiduciary duties requires the advisor to establish, document, follow and be prepared to defend their recommendations. Fiduciary duty cannot be disclosed away.”

As she sees it, “Products and strategies come and go, and innovation is growing rapidly. If the DoL tried to get that granular, it would become a constant debate. Without the actual client and their needs and circumstances, it's hard to say what is in their best interest.” Emphasizing her point, she predicted: “These notorious high-fee products will naturally go extinct and their replacements, as well.”

In the week after the Labor Department’s announcement, SEC Chairwoman Mary Jo White said her agency is continuing to draft a uniform fiduciary standard that would apply industrywide. "I have to emphasize, though, the SEC looked at this issue for many, many, many years. It's complicated. It's not quick, so we're still proceeding," White said on Capitol Hill.

Looking out three years, Garrett expressed characteristic optimism that investor protections will grow. By 2019, “All financial advice must be rendered by fiduciaries,” she enthused. The SEC will “expand the Advisers Act of ’40 to all those rendering advice.”

FIDUCIARY CULTURE

In the same thought, she acknowledged that broad changes rarely happen overnight. “It'll take longer to establish a fiduciary culture,” she said. “Our nascent profession has been moving that way and the regulations will accelerate the evolution.”

Her firm has seen a big increase in prospective members this year, but she expects the fiduciary evolution – “when people can make informed comparisons” – will help the entire industry.

“Over the last couple of years, we've been hearing the public specifically requesting a fiduciary. The time-based, hourly-rate billing model offered by our member advisors is continuing to see more demand. Transparency brought forth in rule will continue to raise public awareness, and paying for time can be a great option for many people. As they say, ‘sunshine is a great disinfectant.’ Savvy consumers of financial advice are good for our business.”