Off The Astroturf
It may help to get off the AstroTurf and look at what this fight really is about. A recent Morningstar report assessing winners and losers from the Labor Department rule finds that it will affect $3 trillion of assets held by wealth management clients, and the aforementioned $19 billion of revenue to wealth management firms.
The biggest battleground will be the market for rollovers at the point of workers' retirement of 401(k) assets to Individual Retirement Accounts (IRAs). Any advice from an adviser to do a rollover will have to be demonstrably in the client's best interest - and Morningstar estimates that $200 billion in IRA rollover money will be affected annually. The report forecasts a massive shift - more than $1 trillion - away from commission to fee-based accounts, robo-adviser and low-cost passive index funds.
The big losers will be life insurance companies peddling expensive variable annuity and fixed-index annuities, and money management firms specializing in actively-managed accounts. Also on the losing end of the stick will be alternative asset managers or products such as non-traded real estate investment trusts and derivatives.
The ongoing rear-guard fight against the rule is especially unfortunate because the need for real, holistic planning services has never been greater - and the new rule offers a massive opportunity for industry players who are able to adapt. Some apparently recognize that, and are quietly preparing for the new fiduciary world.
"Just a few months ago, we were hearing from a lot of companies that they were fighting it, and not preparing for it," said Tricia Rothschild, head of global adviser and wealth management solutions at Morningstar during the company's annual investment conference this week. "But all that energy has shifted in the last two months. The firms we work with are very much focused on what they need to do to meet the new requirements."
She added: "The large firms can hope and pray, but they need to prepare. If they're not ready, they will be caught flat-footed."
Mark Miller is a writer for Reuters.
U.S. Chamber Fight Over DOL Rule Is A Facade
June 16, 2016
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Comments
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ouuuu, you make it sound so simple obviously you drink ALL of the Government Kool-Aid.... A corrupt and self-interest based Administration $18-TRILLION in debt see's a potential $7.6 Trillion windfall in Retirement Plan assets if they can just convince enough of you that they're going to "fix" the problems and ultimately take-over control of retirement funds......What the heck they've done a wonderful job with SS, Medicare and every other program they have stuck their greedy little fingers in!
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The so-called fiduciary standard requires any advisor working with retirement accounts to avoid conflicts and act in the best interest of clients in the products they recommend. Gee, if all the honest advisors backed the standard, consumer confidence would increase, and possible more sales. Seems only DISHONEST people would not want it.