ST. PETERSBURG, Fla. -- After the second comment period of the Labor Department's proposal for a fiduciary standard, Raymond James' CEO Paul Reilly still says it's "not a good" rule.
In his opening address to the Raymond James' 21st Women's Symposium, Reilly gave attendees an update on the overall state of the firm and touched briefly on how the rule might change things for advisors moving forward.
"While the DoL is well intended, I don't think they fully understand, not being in the industry," Reilly said. "The DoL's full time job isn't to understand financial advisors. They don't have the examination horsepower, they don't understand what goes on day-to-day."
Reilly noted that Raymond James was the only firm to testify during the DoL's public hearing on conflicts of interest, the most recent hearing addressing the proposed rule.
The executive talked to reporters in an interview shortly following his speech. His primary opposition against the rule is that it would restrict certain products, particularly those in smaller accounts. Reilly argues that should the rule stand in its original form, it might be entirely cost prohibitive for Raymond James to continue to serve smaller accounts.
"Honestly, it increases profitability to close small accounts," said Reilly. "A lot of firms do that. They force minimums, they force fees to get rid of small accounts. But we have taken a different approach: We actually want our advisors to be able to service small accounts…even though there's a cost to us, we think there's a long-term benefit."
The Labor Department is currently considering what changes - if any - should be made to the proposed rule following the close of its second comment period. While Reilly says he thinks there is little questionthe rule will be approved, he says he hopes the restrictions are more workable and clear on what products are restricted. Until then, any changes regarding how Raymond James advisors do their business are merely speculative.
And as for what small accounts might be in danger of being shut, Reilly says he does not yet know "where to draw the line."
"Hopefully there will be some exemptions, but we'll see. Until I see something, I can't answer what I don't know," Reilly said. "They said they will make changes. They said in a number of areas it wasn't their intent to [limit small accounts]."
- What Fiduciary Rules Could Mean For Clients: Retirement Scan
- Fiduciary Proposal on Aggressive Track
- DoL Fiduciary Proposal Neglects Several Hidden Fees