At the next conference, I was listening to a speaker about reverse mortgages and yep, you guessed it. Apparently, if we aren’t recommending setting up a reverse mortgage line of credit at the very least, the DOL will be after us. By this time, the eye roll was substantial.

In just about every session, the DOL rule was cited as a reason to do some things and not do others. In a couple of the talks, the speakers scared the audience so badly, I thought a couple of people might be drafting their resignation letters on their tablets in the lobby right after the sessions. 

Don’t let speakers, home office people or industry lobby groups work you into a frenzy. If you are getting uptight about this, please, take a deep breath and try to relax. It won’t be that onerous for a lot of readers of Financial Advisor.

Surely, there are some potential pain points. If you intend to rely on the full Best Interest Contract Exemption (BICE) to accommodate commission income for instance, there is some work to do. It seems reasonable to me that your home office will gripe about the BICE, but the type of mandates and doom I described from the recent conferences really should not be a source of great stress.

Here are a couple of things to keep in mind about the DOL and fiduciary responsibility. 

First, cost is a consideration, not the central issue. In the case in which a client will be paying more by working with you than they did when not working with you, that is NOT in and of itself a breach of the rule or a violation of fiduciary duty.

This is easily confusing since so much of the academic arguments for the rule were based on costs. Fiduciary precedent is clear that all other things being equal, additional costs, especially if they are your pockets, could be a problem. But in the case of working with you versus without you, all things are not equal.

The DOL rule calls for reasonable compensation. Your time, expertise, and potential liability are all things to be compensated. Lawyers are fiduciaries and as we all know, they get paid. Many get paid very well. A high-priced attorney does not fail to meet their fiduciary duty because they charged more than another lawyer, and the cheapest lawyer isn’t automatically deemed to have met his or her fiduciary duties just because they charge less.

Second, losing a case is NOT in and of itself a failure of a lawyer to meet their fiduciary duties. The lawyer is judged based on their conduct. How did he behave? Did he follow a sound process with adequate diligence?

It will be similar for financial advisors. If you have a decent process and follow it adequately, you are not expected to forecast or time the market. When markets dive, complaints rise. That has happened forever and is not some new condition brought about by the DOL rule. If anything, the DOL rule can help you if you take it to heart, implement good procedures and put the client first.