Advisors shouldn’t see a major disruption of their businesses as a result of the DOL fiduciary rule, according to several members of the Committee for the Fiduciary Standard.
“There will be a little more documentation, but [the rule is] not to prevent us from doing business,” said Deena Katz, associate professor in the personal financial planning program at Texas Tech University. “It’s not going to stop us from doing commissions. … It isn’t going to change your business model unless you intend to.”
For RIAs, “your life will [change] somewhat from this, but not to the extent I’m hearing from a lot of people,” said Patricia Houlihan, chief executive of Houlihan Financial Resource Group in Reston, Va.
RIAs may see more documentation requirements in handling rollovers, but they already operate under a fiduciary standard, Houlihan said.
Katz and Houlihan made their comments during a panel discussion Tuesday at Financial Advisor magazine’s second annual Invest in Women conference in Dallas.
The Committee for the Fiduciary Standard, a group of investment professionals and fiduciary experts, supported the DOL rule.
While legal experts are still analyzing what firms and advisors will have to do under the new rule, Houlihan and Katz urged attendees to follow commonsense principles in handling clients.
“If you can’t defend it, you probably shouldn’t be doing it,” Katz said. “That’s a good guideline to what you should be doing.”
“Review how you’re doing things now,” Houlihan said. “Ask, ‘Would I recommend this to my mother?’”
The DOL was intent on extending ERISA-like protections to IRA rollovers, Houlihan added, so even fee-based RIAs need to be careful.
For RIAs, it will be “challenging” to roll over assets from a low-cost plan like the federal Thrift Savings Plan, Houlihan said, “unless the client wants to do it [to] get more options and more services.” RIAs have the flexibility to handle the rollover, she said, “but what you want to do is document, document, document” the reasons.