While the brokerage sector of the financial services industry celebrates, many advisors responded with confusion and frustration after a federal appeals court struck down the Department of Labor’s fiduciary rule on Thursday.

Industry organizations, watchdogs and pro-fiduciary advisors expressed their disappointment in the decision in public statements on social media.

Knut Rostad, president of the Institute for the Fiduciary Standard, did not hold back his dismay in a Friday e-mail:

“The [Fifth] Circuit’s decision is a national tragedy,” Rostad wrote. “Its harms are well known, predictable and calculable. No mystery as to how they’ll hit American savers. The decision deserves its own march on Washington.”

The federal Fifth Circuit Court of Appeals in Dallas voted 2-to-1 on Thursday to strike down the DOL’s fiduciary rule, with the majority ruling that the agency abused its regulatory powers in creating the rule.

The lawsuit was brought by industry organizations opposing the rule, including SIFMA, the U.S. Chamber of Commerce and the Financial Services Institute (FSI), which represents the independent broker-dealer industry.

“The court has ruled on the side of America’s retirement savers, preserving access to affordable financial advice,” wrote the plaintiffs in a joint statement. “Our organizations have long supported the development of a best-interest standard of care and the Securities and Exchange Commission should now take the lead on a clear, consistent and workable standard that does not limit choice for investors.”

It's not yet known whether the DOL will choose to appeal the decision to the U.S. Supreme Court or ask that the matter be heard by the full Fifth Circuit Court. It is notable, however, that President Donald Trump and many of his appointees have spoken critically of the DOL’s regulation.

Greg Valliere, chief global strategist for Charlotte-based Horizon Investments, said that the rule would likely be “in limbo” until the DOL decides to appeal or until the SEC moves forward with its own fiduciary rule.

“Our guess is that the original proposal will never be fully implemented; its legacy may be that while it burdened small firms, it has prompted tougher self-regulation by the industry as a whole,” wrote Valliere.

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