The Register tap’s into the experience and viewpoints of the IARFC and MRFC Board. They come together from different backgrounds, with different goals and expressing different opinions. The constant is the respect and dedication given to their commitment to the IARFC.
DOL More, More… AND MORE DOL Regulations — the Status Obviously the DOL fiduciary rule has garnered a lot of attention over the past year. Many people feel this is a good thing while in other circles I’ve heard the terms “onerous”, “harmful”, and “confusing” to describe its effect on the financial industry. Recently, the rule had been given a window where opinions could be gathered, followed by an announcement that was made proposing to delay the implementation of the rule from January 1, 2018 all the way to July 1, 2019. It seems there’s something new happening every week, and usually more confusion and indecision follows. Either way, this whole process has been complicated and certainly one that is dragging the public along with it. As with any new regulations, there are a lot of gray areas in the conversation — so who knows exactly what will happen when the law goes into effect, if it ever does. The rule was originally designed to give new protections to consumers where financial professionals are required to act in the best-interests of their clients where, in the past, a suitability standard was the standard in use. Financial professionals are in essence raised to the level of a fiduciary and as such are bound legally and ethically to meet those enhanced standards. Why might this be happening? Unfortunately, over the years, there have been many people who have not acted in their clients’ best interests. Now the government has felt it necessary to become involved. However, additional regulation, while done in good faith, isn’t always the right thing. I can remember when I first started in practice that an application to open an account was five to six pages long, now it can be as long as forty to fifty pages. Certainly this hasn’t prevented anything other than give us an added headache. However, I whole-heartedly support the need for there to be a standard of care in Page 13
the industry that puts client’s needs first and a standard where the norm is to always act in a client’s best interest #1. To do otherwise is a violation of our ethics. With that being said, the way in which the DOL is going about it will most likely not solve the situation. I believe it could possibly do more harm than good and cause numerous financial professionals to leave the industry altogether causing a shortfall of people able to help a growing group of retirees and baby boomers. In my mind, when the government forces more and more regulations and more and more government control it ultimately will make the financial planning process more cumbersome. My concern has always been that this could be a step in the direction where the government makes the personal financial decisions for you. Taking the control away from the financial consultant and their client and instead telling you what you can and cannot do. It’s a double edge sword where added protection is important, but at what cost is something we’ve yet to really see. More rules aren’t always necessarily good for everyone. In my own practice, I was raised by my father (whose been a financial consultant for over 50 years) to always act in a client’s best interests. At times we’ve had to blow the whistle on people in our industry who acted in ways that hurts their clients. So acting as fiduciary is something we have believed in for many years. And while this rule will most likely not affect our process much, we know other financial consultants whose worlds will be turned upside down as a result of it. How they get paid may have to change, how they communicate will have to change, the advent of fee-based products instead of commission-based products may be upon us. Many people who might be hurt the most from the DOL are those in the insurance world who do not have recurring assets under management. They may not be able to keep themselves in business.
Those who have prepared themselves in advanced and who have gotten the proper licenses and act in the best interest of their clients will be able to weather this storm. However, these regulations could force a lot of consultants out of the business. This might be a good thing for those able to withstand the change, but I feel the future of the industry will be altered as many people wanting to enter the financial field may now avoid it. It’s a shame, but the writing has been on the wall. I’ve seen way too many people over the years being sold the wrong products with no one building an actual written financial plan to guide them through life. It’s like selling someone a car on an island where there’s no road to drive it on. Times need to change and as financial consultants we should elevate our standard of care and always do what’s in our client’s best interests. We shouldn’t have to live through a time where a political body determines what that is.
Nicholas Royer, RFC® Nicholas Royer, RFC® President of Group 10 Financial, LLC and IARFC Vice Chairman. Nick and his father Jerry co-host their radio show on numerous radio stations. Contact: 800.245.0546 firstname.lastname@example.org www.group10financial.com Investment Advisory Services offered by Brookstone Capital Management, LLC., an SEC Registered Investment Advisor The Register | September-October 2017
Published on Aug 25, 2017
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