So, is the DOL rule a non-event, or not?
The Department of Labor’s fiduciary rule will either have an immaterial impact on brokerage firms, or it will limit the products and services they can offer and increase legal risks, according to the firms’ latest SEC filings.
The second-quarter earnings reports of the public brokerage firms released this month contain many of the firms’ first disclosures about the impacts from the final DOL rule, which was released on April 8.
The conclusions are a decided mixed bag.
Some firms said the rule would not have a material impact or the effects were still unknown.
• Ameriprise Financial said it was “continuing to review and analyze the potential impact of the regulations on our clients and … our business.”
• Bank of America Corp., with its Merrill Lynch wealth management unit, said the firm does “not expect this [rule] to have a material financial impact … in 2016, and we continue to evaluate the impact, if any, thereafter.”
• Charles Schwab Corp. said that “based on the company’s evaluation of the final rule to date, the company does not expect the rule to have a material impact.”
• Morgan Stanley said “while we are still assessing the impact of the final rule, given the breadth and scale of our platform and continued investment in technology and infrastructure, we believe that we will be able to provide compliant solutions.”
Two firms warned of potentially ominous consequences.
• Raymond James Financial said that because IRA accounts comprise a significant portion of its business, “we expect that implementation of the DOL rule will result in significantly increased compliance, legal and information technology costs. In addition, we expect that our legal risks will increase due in part to the new contractual rights.” The firm also expects the rule will “limit our ability to provide certain products or services” to IRA investors.
• LPL Financial likewise said the rule “will likely affect the products and services we provide … and the compensation that we and our advisors receive … as well as our regulatory compliance and other costs. … In addition, the DOL Rule creates increased risk of private arbitration and litigation, including potential class action litigation.”
Others didn’t bother to mention the impact from the DOL rule.
TD Ameritrade, Stifel Financial, Wells Fargo Corp., and Ladenburg Thalmann Financial Services, made no mention of DOL rule in their latest quarterly filings.