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Planning for a fiduciary future

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The fiduciary rule has been the biggest catalyst for industry change in years.

An enormous amount of energy, time and money has been expended fighting for and against it. Still more effort has gone into complying with the regulation. Now that the president is moving to undo it, the question naturally arises: Does that make all the planning and work firms did worthless?

Unequivocally, the answer is no.

“This rule has made us better,” Michael Partnow, a vice president at Pershing Advisor Solutions, told attendees at the FSI OneVoice conference in January. “It’s made for more informed advisers.”

Sure, coming into compliance has increased expenses. It’s also taken quite a bit of effort. “We’ve just concluded our 25th meeting,” said Wayne Talleur, the president of Madison Avenue Securities, at the FSI conference.

But as Ann Marsh, a Financial Planning senior editor, sees it: “The highly public debate around the fiduciary rule can’t be undone. The public is more aware of fiduciary service than ever and is only likely to become more so in the future.”

Clients increasingly want — demand, even — lower fees and greater transparency, adds Andrew Welsch, the senior editor who wrote our special report on the topic, “No turning back the clock on fiduciary.”

“The phrase ‘conflict of interest’ has become part of everyday vocabulary,” Welsch tells me. “The business will keep moving toward greater transparency because that’s what clients say they want. It’s Econ 101, supply and demand.”
If the rule is completely overturned, some firms may revise or jettison their plans around the best interest contract exemption, Welsch suggests.

“Some firms may also re-examine recruiting deals, which came under fire from the Department of Labor for creating potential conflicts of interest,” he adds. But for the most part, executives plan to retain most of their fiduciary preparation “regardless of the fate of this rule,” Welsch says.

The same is true for digital advice, Financial Planning Managing Editor Suleman Din found when reporting, “Robo Advisers: We Can’t Be Stopped.” Due to increased transparency and digital information, the era of hiding behind fine print and pushing products is over, he says.

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