Even though creating a new Department of Labor fiduciary rule for some registered investment advisors and independent broker-dealers has dominated discussions among financial leaders for some time now, clients are largely unaware of the pending changes, leaders of the National Association of Personal Financial Advisors, say.
The debate over what kind of a fiduciary rule should be implemented for RIAs and IBDs offering retirement planning advice has dominated much of the financial news since the latest version of the proposal was issued in April, but most clients have no idea new protections for them are being weighed, says Frank Moore, the new NAPFA chairman of the board.
Moore and Geof Brown, NAPFA CEO, recently sat for an interview with Financial Advisor magazine and shared their thoughts on a wide range of issues. The proposed DOL fiduciary rule has the support of NAPFA even though it may need revisions after it is approved, Brown and Moore say.
“Those who will be impacted the most are obviously advisors who are not acting as fiduciaries now. This [financial planning] is not a sales game anymore. Now it is about taking care of the clients,” Moore says.
“DOL had a weighty task before them in creating a fiduciary rule,” Brown adds. “The rule has to be business-model neutral so that it works in any environment.”
After a rule is adopted, NAPFA feels the conversation about how to put the clients’ interests first will have to continue, he says. “We will need to see how this best-interest, exposure-focused rule works out. NAPFA will be promoting a narrative that consumers deserve advice that is in their best interests and that is objective.”
NAPFA members already adhere to that standard for their clients, but “we are seeing that standard take over the rest of the industry,” Brown says.
Advisory clients expect to get objective advice, but “that is not what they are always getting now,” adds Moore.
NAPFA members, who charge fees for services and adhere to a fiduciary standard, may have to make some administrative changes, depending on what the new DOL fiduciary rule requirements are, “but I think members will be willing to make any changes to see that the public is protected,” Brown says.
NAPFA leaders hope new standards affecting retirement plan advisors will improve the public’s image of financial planners. Strict standards that would affect anyone offering financial advice, not just those offering retirement plans, would be even more useful, Moore says.