“Even if the DOL, SEC or Finra roll back the fiduciary rule so that lots of advisor reps and insurance agents are no longer fiduciaries, the reasonable compensation limits would still apply,” Reish said. That’s because ERISA rules and IRS code are not predicated on any professional or firm being a fiduciary. If you provide service to a qualified plan or an IRA, you’re subject to the reasonable compensation rules.

Reish said that while in-house attorneys understand the ramifications of reasonable compensation limits, “if you’re talking about reps and insurance agents out in the field, there is a vague feeling that the fiduciary rule might go away without realization that [the reasonable compensation] piece is here to stay.”

The impact of the compensation limits, when it finally sinks in, will be multi-fold, Reish said. It will accelerate the industry’s transition from commissions to fees, because determining “reasonable compensation,” at least in the DOL’s mold, depends on services provided, not on products sold.

“Just because a product says you get a 5 percent commission, doesn’t mean your service warrants 5 percent or that the 5 percent will be seen as reasonable,” Reish warned.

Reasonable compensation limits must also be determined by a transparent, competitive marketplace, as the rules have been interpreted by the DOL.

“That will drive lower compensation and product prices, since everyone is using benchmarking and can see exactly what most products cost,” Reish said. The impact in the 401(k) world has been to flag overpriced plans and costly compensation, which have all gone down.

The IRA market is likely to undergo the same type of disruption, Reish predicted. While IRAs have been governed by IRS “reasonable compensation” rules for decades, the IRS code has been largely unenforced to date, the attorney said.

The products that are hardest to value will give firms and advisors the greatest compliance challenge when it comes to defining reasonable compensation. These products include variable annuities; hedge funds; private equity funds; and any hard-to-value, illiquid asset where the consumer can’t find, understand or justify an advisor’s compensation because of the dearth of transparent markets, Reish predicted.

While DOL, ERISA and IRS rules govern qualified assets and IRAs, the SEC can rein in registered reps’ unreasonable compensation practices in the nonqualified market with its own rules. The agency has said it is on track to release a proposal in the second half of 2018.

“Whatever the SEC decides, it seems to me almost certain that it will develop a hybrid best-interest standard for investment advisor reps,” Reish said.