Not only will the rule prompt a consolidation of firms, it will also decrease the number of products advisors handle, according to Christine Gill, head of the Investor Solutions Group & U.S. Financial Institutions at BNY Mellon.
“Implementing the rule is going to be challenging for mid-size and smaller firms, so you are going to see a lot of consolidation,” she says. “Asset managers also will look at their products and consolidate because of the due diligence requirements. They also will re-evaluate their operational models to be more cost effective and efficient.”
Advisors used to be able to use being a fiduciary as a marketing tool, but that edge disappears when everyone dealing with retirement plans is a fiduciary, says Greg Vigrass, president of Folio Institutional.
“RIAs still hold the high ground, but they will need to adapt to stay competitive,” Vigrass says. “Technology can help an advisor stand out from the crowd, meet retirement account clients' needs, be profitable, reduce complexity throughout their firm and provide the transparency the rule requires."
Despite the years of negotiations over the DOL rule, which was originally proposed by President Obama, the debate over standards for advisors is far from over. In addition to the fact that the DOL rule is still being reviewed, the Securities and Exchange Commission has now jumped back into the situation and could propose an even more far-reaching rule.
The Financial Planning Coalition, made up of the Certified Financial Planner Board of Standards, the Financial Planning Association and the National Association of Personal Financial Advisors, said in a statement it supports the SEC “extending the fiduciary rule to broker-dealers who offer personalized investment advice. However, any work done by the SEC should not stymie or undercut the fiduciary rule that will be implemented by the DOL, the coalition says.
“A rule considered by the SEC cannot be considered as a replacement of the DOL’s fiduciary rule,” the statement said. “The DOL rule and any proposed SEC rule would fall under different statutes and serve different purposes.”