Indeed, the reality is that many leading broker-dealers may have little or no interest in the type of rep who gravitates towards the highest commission products and seems to always find a reason why it is in the client's best interest. But as commission structures change, those days appear to be over.
Given the stringent requirements of the DOL’s fiduciary standard under ERISA, many brokers and some RIAs are hoping that the SEC will enter the debate and promulgate its fiduciary standard for RIAs as the law of the land. Essentially, the SEC standard requires RIAs to disclose any conflict of interest while the DOL, relying on ERISA, states all conflicts must be eliminated, unless an advisor is granted regulatory relief as in the Best Interest Contract exemption.
Thompson thinks the SEC is late to the game, but will still be able to have influence over taxable accounts. In his view, when it comes to retirement accounts, the DOL will initially take it easy on firms that demonstrate good faith in trying to comply with the rule. “But B-Ds who say they aren’t fiduciaries will have to defend against a higher standard,” he adds.