The new president made many campaign promises that most people thought were typical political hot air. He is barely two weeks in office and has stunned the world by acting quickly and following through on his word.

Will his latest decision, made in a presidential memorandum, eventually scuttle the requirement that all advisers working on retirement plans act in a fiduciary capacity for their clients? That appears likely, so what will that mean for advisers?

President Trump after signing the executive order on Dodd-Frank and the DoL's fiduciary rule. (Bloomberg News)
President Trump after signing the executive order on Dodd-Frank and the DoL's fiduciary rule. (Bloomberg News)

First off, keep in mind that the public has been primed with the message that advisers will be required to act in a client’s best interest. The government's announcement last April of the fiduciary regulations made big headlines far outside the advisory world. The comedian John Oliver dedicated an episode of his HBO show to hilariously ripping apart non-fiduciaries and letting the public see the obvious advantages of hiring an adviser who pledges to act as a fiduciary. The video of the segment has been viewed almost 6 million times. Many Americans may still be oblivious, but the public is more aware than ever of the perils of relying on a financial adviser who does not promise to put the client's interests ahead of the adviser's.

Even while fighting the rule, most large institutions were preparing to follow a fiduciary standard. It will be fascinating to see what they do – keep moving forward with implementation of fiduciary practices, or revert to their old ways of obfuscation about services and fees. It may be foolish to do an about face amid recognition that the investing public understands and wants their advisers to act in a fiduciary capacity. We’ll see if the big firms take the easy road or the high road.

'FREE ADVERTISING'
Like many other independent planners, those of us who have been fiduciaries from the outset are sitting pretty either way. Just the talk about the fiduciary rule has been free advertising for planners committed to prioritizing their client's needs over juicing their own compensation. I received two calls from potential clients looking for an adviser – they knew nothing about what they were looking for except that they needed to hire a fiduciary. If the rule is thrown out, we have continued free marketing and the calls and emails will come our way.

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"Like many other independent planners, those of us who have been fiduciaries from the outset are sitting pretty either way."

Nonetheless, most fiduciary advisers I know will be delighted if the rule stays in place. Although all advisers would theoretically be on the same playing field, formerly non-fiduciary advisers will need time to learn how to walk the talk. A uniform fiduciary standard – that over time also encompasses financial advice beyond retirement plans – would force current fiduciaries to up their game.

Once the fact that everyone is a fiduciary is accepted by the public, advisers would need to provide better service at lower prices to compete. Isn’t that what the administration wants?

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Carolyn McClanahan

Carolyn McClanahan

Carolyn is a CFP and M.D., and is the director of financial planning at Life Planning Partners in Jacksonville, Florida.