Still, many RIAs supported it as an important consumer protection measure and they think consumers’ awareness of the higher standard is growing. The DOL rule may be DOA, but it created clearer distinctions between sales-oriented brokers and advisors held to the fiduciary standards.

It’s not good for consumers that the rule has gone away, says Deb Wetherby, CEO and founder of San Francisco-based Wetherby Asset Management. It imposed discipline on advisors, she says. Still, she thinks the trend is here to stay. “This trend away from a sales-based model to more of an objective advice model was in place long before the fiduciary rule.”

According to the “2018 RIA Sentiment Survey” from TD Ameritrade Institutional, RIAs named regulations as their largest potential roadblock, but that survey was fielded in 2017, before the DOL rule judgment and before the SEC came forward with its own proposal, “Regulation Best Interest.” The SEC version prevents brokers from calling themselves advisors, but leaves the door open for them calling themselves “financial planners” or “wealth managers.” (Separate agency proposals mandate continuing education, account statements, minimum capital and fidelity bond requirements.)

“With the SEC’s proposals, I think there is some confusion that will exist between retail investors as to the difference in best interest rules for broker-dealers versus the fiduciary duty for RIAs,” says Eric Kittner, chairman of Clayton, Mo.-based Moneta Group Investment Advisors and partner in the Sheehan-Kittner team of the Moneta Group. “I don’t know that any of it provides a lot of clarity for the end consumer.”

At the end of the day, the brokerage industry has more resources, clout and organization than RIAs, says McMorrow. What many see as a pro-Wall Street tilt at the SEC may result in more regulatory burdens for RIAs and fewer for brokers. “I am worried that the regulation may end up being turned against RIAs at some point because of the power of that [broker] lobby,” says McMorrow. “I already see that those of us who subject ourselves to the fiduciary standard are beset with a lot of regulations. It feels like the pressure is mounting on us, when it should be mounting in favor of the consumer interest.”

Growing Industry, Growing Firms

While growth is important for financial advisories, some worry about growing too quickly.

“At what rate can we grow and have it not be at the expense of our existing clients?” asks Wetherby, whose firm, founded in 1990, has expanded into a $4.7 billion AUM RIA with multiple specialties, among them ESG and impact investing offerings. The firm also aims its services at women and clients going through life transitions.

Sustainable growth is typically organic growth—the ability to attract new clients and assets—and the Moneta Group, an $18.5 billion firm, encourages its partners and teams to grow this way. Each of the firm’s 22 teams of advisors retains autonomy over its book of business, depending on Moneta mostly for enterprise back-office support.

“We have a very entrepreneurial culture and environment,” says Kittner. Now the firm’s 40 partners are re-examining whether to move more responsibilities from the teams onto the enterprise.

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