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DOL Fiduciary Rule
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The Fiduciary Standard Has Already Been Set

Industry executives and experts say we will continue down the road toward a fiduciary standard, regardless of the court’s decision.

Late yesterday, a U.S. Court of Appeals for the Fifth Circuit panel struck down the Department of Labor’s fiduciary rule. But industry executives and experts say the industry will continue down the road toward a fiduciary standard, regardless of the court’s decision.

“A lot of firms have already made a huge financial commitment in terms of training new supervisory procedures and other things to mitigate conflicted advice,” says Duane Thompson, president of Potomac Strategies and senior policy analyst at fi360. “I think it would be just as much work backtracking as it would be maintaining the fiduciary compliance requirements under the impartial conduct standards and what they might have already had in place.”

The department has said it will not enforce the rule—for now, according to a Bloomberg report.  

Andy Sieg, the head of Bank of America’s Merrill Lynch brokerage, sent a memo to advisors Friday afternoon declaring that regardless of the court’s decision and what it means for the DOL’s rule, the firm “always will act in our clients’ best interest.” The note, reviewed by, also reiterated that Merrill Lynch has also been in favor of a “harmonized” best interest standard, with “clear and consistent rules, when advisors provide personalized investment advice to retail clients in any account.” Like Merrill Lynch, other firms are staying the course.

“We’re going to enforce the standard regardless,” said Bobby White, CEO at RFG Advisory in Birmingham, Ala., a hybrid firm with $1.7 billion in assets under administration. “What the DOL rule, or the attempt to put this rule into place, has done is brought attention to a very important topic. Now you have clients that were used to you and never asked these type of questions, they come in now and one of the first questions they ask of their advisor is, ‘are you a fiduciary?’”

White’s firm, while mostly fee-based, does some brokerage business through LPL Financial, which he says spent a lot to comply with the fiduciary rule.  

“I’m hopeful that their thought is that a best interest standard is necessary; I think they do,” White said. “Clients and the investing public—they’re going to require it, and that’s a good thing for our business long-term.”

But there’s a difference between having a firm policy requiring advisors to act in the client’s best interest and a legal obligation to do so.

“The fiduciary mindset is here to stay,” said Robert Cirrotti, managing director and head of retirement and investment solutions for Pershing. “However, as we proceed though, what you might find is there being a distinction between best interest standard and acting in the best interest of their client versus taking on fiduciary responsibility.”

Cirrotti believes many will move forward with the changes and the approach to client care, while not necessarily applying the fiduciary label to the activity.

Elliot Weissbluth, CEO of HighTower, a $50 billion firm, says investors now expect more.

“You can’t unring the bell on the fiduciary movement,” he said. “Assets and people are migrating out of the conflicted business models into business models that are unconflicted. So whether the governments, or the judiciary or the regulators get it right today or maybe they get it right next year—hopefully they get it right sooner rather than later—at the end of the day, the American investor and consumers are waking up to the difference between someone who has a true fiduciary duty and somebody who doesn’t. And they’re migrating toward those who have true fiduciary duties.”

Thompson believes the court decision could cause a divergence in the industry, between firms that will stay the course and those that “may want to move away from the standard back to the existing requirements.”

“I’ve also heard there are some parts of the industry that didn’t even think the rule went into effect, so maybe they’re blissfully ignorant and maybe they won’t even hear about the court decision and they’ll be doing what they’ve been doing,” he said.

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