A few years ago, authorities banned the use of golf carts on a section of a roadway. Many areas here in Florida allow the use of carts on some roads within the neighborhoods of golf course communities, but on this particular stretch of road the carts moved at a much slower speed than the regular traffic. Their presence was hazardous. 

Despite the obvious need for the ban, some cart drivers who used that stretch of road protested. They would no longer be able to do what they were doing. 

They were “all for safety” and were adamant that they were being careful to do no harm. As proof, they cited the fact that there had not been any actual accidents on that road. A few even suggested that more than just the cart drivers would be inconvenienced. They claimed that if they were forced to use their carts on the residential roads, it would hamper their neighbors’ ability to get around. The cart drivers’ ability to use the road was therefore actually a benefit to the community.

They lost handily because their arguments didn’t hold up to basic logic and an important group of people spoke against the protestors’ positions. Any normal person, not biased by the convenience or habit of using that part of the road as a shortcut for their golf cart, could clearly see the carts should not be on it. I’ll get to the important group later.

Whether they thought they were being careful or not didn’t make the dangerous situation safe and just because they didn’t think they were in danger didn’t mean everyone was out of harm’s way. A few more carts on the other roads wouldn’t cause traffic jams, so the “inconvenience to others” argument melted away quickly.

Nonetheless, many of those golf cart drivers made quite the fuss. One guy tried to rally support by saying that the new rule would ban his portion of the community from owning their own golf carts. According to him, it was all a conspiracy to force them to rent carts from the country club.

I have found myself thinking of the cart owners often lately as I hear lobbying forces rail against the Department of Labor’s fiduciary rule proposal. This is an important issue for anyone advising people about retirement.

There is a significant portion of the financial advice community that thinks the DOL proposal is both good and long overdue. As you’d expect, most of these folks are investment advisors and financial planners that are already subject to a fiduciary standard that expects them to eliminate conflicts where possible, and where not possible, to both disclose and fairly manage the conflict in the client’s favor. Being required to do something they already do is obviously no burden at all.

The underlying logic of the DOL rule is compelling. One cannot serve two masters. Hardly a new concept. Other proponents include a lot of consumer advocates, HR directors and, frankly, most people who spend a little time thinking about it. If you are offering your services to advise people on what is best for them, you should be accountable to actually advising them to do what is best for them.

The protestors are who you would expect also. Largely the brokerage and insurance firms. Like the golf cart owners, they start by saying they support a fiduciary standard, just not this one. They are not out to harm anyone and no one is harmed by how it is anyway. In fact, they say, if the proposed DOL rule goes into effect, it will be bad for most people. Too much traffic on quieter roads.

Rubbish.

It won’t even be bad for the financial services firms. They will just have to adjust their processes. Heck, most of these companies already run programs subject to fiduciary duties stemming from the Investment Advisers Act.

Like the golf cart owners who wanted to keep their shortcut, they are perfectly capable of making the changes needed. They just don’t want to change their behavior. 

Like the increased traffic arguers, opponents of the DOL rule are putting out some interesting stuff that can sound like it has some merit until one looks at it more closely. There are plenty of analyses out there to read if you are interested in a detailed dissection of the arguments. But a couple of other things stand out to me.

Remember the guy who was telling his neighbors that banning carts was really an effort to ban that section of the community from owning their own carts? Well, there are similar pieces of misinformation coming out with increasing frequency in the DOL matter.

The issue has become politicized, and with an election coming up, it may get even worse. 

One of our clients received a breathless e-mail alert from a group that is not a fan of President Obama. It called the DOL proposal, “regulations that will pave the way for the federal government to seize effective control of your 401(k), IRA and any other non-union retirement plan that you hold independently or was provided to you through your employer.” It went on to call the proposal “Obamacare for your retirement plan.”

And so it is with politics -- characterize the issue in whatever way suits your agenda.

Partisanship isn’t necessary to play this game.

An e-mail from an unnamed insurance company to its agents was making the rounds on a couple of message boards. In it was this line: “If the regulation is implemented as written, clients must pay a fee prior to meeting with an agent or retirement specialist, regardless if a product purchase is made.”

The DOL proposal has no such requirement. Was the insurance company lying or just mistaken? I don’t know.

The e-mail goes on to urge the company’s agents to write to Congress. NAIFA’s pre-written letter ends with this declaration: “Please know that I already put the interests of my clients, your constituents, first. My clients -- many of whom I have worked with for over a dozen years -- know that I serve their best interests. Otherwise, they would no longer be my clients.”

That sounds a lot like, “We are careful drivers of our golf carts, and if we weren’t there would already have been a crash.”

I also became aware of the commercials the Secure Family Coalition has put together about the DOL rule. This coalition is a joint effort of several insurance-related organizations. The ads express dismay from hardworking citizens that regulations from Washington will make it harder to get advice and information about their 401(k) and IRAs and that they would no longer be able to work with their person without paying a lot more.

That sure sounds awful, and as long as the public doesn’t actually look into the matter, they may fall for it.

The protesting golf cart owners had their positions undermined by an important group -- golf cart owners that used the shortcut but knew it was dangerous and had long ago stopped taking the shortcut. Their behavior change had not caused them any suffering for taking the longer route. They knew that all would be safer and were willing to adapt, despite the inconvenience, even before it was required.

Ray Ferrara has been giving his time and considerable talents to the financial planning profession for decades, most recently as chair of the CFP Board. His testimony at a DOL hearing in August on behalf of the Financial Planning Coalition was masterful. The most important element of it being that if his fee and commission firm can handle the responsibility, anyone else that wants to can handle it as well. He stopped driving his cart on that road a long time ago. 

As he put it in his remarks, “The argument that this rule will diminish the availability of services to middle-class Americans is simply not credible. ProVise has successfully served middle-class clients under a fiduciary standard for years. The re-proposed rule still allows us, and everyone else, to provide advice using a commission or fee model.” 

Ferrara is not alone. There are many financial planners across the country in every sort of firm who conduct themselves as fiduciaries, whether doing so is required by law or not. They know adapting their processes to put clients’ interests first and eliminate conflicts of interest is the best way to serve their clients and therefore great for their business.

Ferrara is leading the way, as usual, by example. Will enough registered representatives, IARs and insurance agents follow? Will they speak up and get through to their firms -- and the organizations lobbying for their firms -- that they are not afraid of fiduciary responsibility? We’ll see. It could make all the difference.

Dan Moisand, CFP has been featured as one of America’s top independent financial advisors by Financial Planning, Financial Advisor, Investment Advisor, Investment News, Journal of Financial Planning, Accounting Today, Research, Wealth Manager and Worth magazines. He practices in Melbourne, Fla. You can reach him at [email protected]