Under the U.S. Department of Labor’s fiduciary rule, financial advisors will have to do more to distinguish themselves as “true” fiduciaries, according to a leading financial commentator and author.
Speaking on Thursday at the 2017 Inside Retirement conference in Dallas, journalist Jane Bryant Quinn told audience members that the rule, likely to pass in a watered down form, will lead to many firms applying the term “fiduciary” to their work, though they may not fully embrace the current rule’s best-interest standards.
“We might end up with a fiduciary rule, but in name only,” said Quinn, an ardent supporter of more stringent standards for retirement advice. “In that situation, we would have true fiduciaries competing with fake fiduciaries, because the SEC is enabling fake fiduciaries.”
Quinn explained that the SEC, in guidance rendered after the passage of the 2010 Dodd-Frank Act, reported that it could not distinguish the difference between a strong best-interest standard for retirement advice, and a standard of full disclosure for retirement advice, a ruling that neuters the term “fiduciary.”
Currently scheduled to become applicable on June 9, Quinn believes that attempts to block the rule in Congress will ultimately fail, though another delay is likely because the Department of Labor’s decision to delay the applicability of the rule’s litigious enforcement mechanism until January 2018 gives non-compliers an opportunity to continue their behavior without any consequences.
“All of these newly minted fiduciaries are on their honor,” remarked Quinn.
The debate about retirement advice comes as the developed world experiences political upheaval and aging populations become the dominant long-term demographic trend
Quinn told advisors in the audience not to worry about partisan political debates.
“I bet you’re all happy that the topic today is money and not politics . . . don’t let political cage fights that go on in Washington influence your investment decisions,” said Quinn. “The U.S. economy is not really growing faster, but it’s not falling apart since the U.S. elections.”
Despite the mixed economic signals, Quinn believes the long, slow climb of the economy since the 2008-2009 financial crisis will continue, perhaps punctuated by a growth spurt should President Donald Trump and Congress agree to some form of fiscal stimulus.