A new Department of Labor fiduciary rule governing the securities industry casts an unfavorable light on some existing relationships between investors and broker-dealers, says Andrew Crowell, Vice Chairman of D.A. Davidson & Co.'s Individual Investor Group.
Crowell has studied the new rule extensively, and writes in Financial Planning magazine that he believes its writers have created unintended consequences that harm both investors and brokerage firms that only follow what is called a suitability requirement in their work for investors.
In his article, Crowell outlines the reasons he believes that the securities industry's opposition to the rule is aimed at protecting investors:
Fiduciary Rule Hurts More than it Helps
By Andrew Crowell
Much has been written of the industry push back on the fiduciary proposal, but the tone has mistakenly implied that the industry is resisting doing the right thing for retirement investors and trying to protect its revenues.
In fact, the opposite is true. Unlike the DOL’s insistence on a one-size-fits-all service solution to retirement accounts, we believe in allowing investors (not the government) to choose what type of investment relationship and structure is best suited to their needs and goals. We believe in full investor protections, whether under the B-D or RIA structure, and in freedom of choice for investors.
The DOL's rule actually restricts choice. Investment products, services and account structures have expanded dramatically in response to investor demand. Ironically, most firms who service retirement accounts have actually projected that their revenues will increase under the rule because investors who previously paid a commission or sales charge would be paying an annual fee in many cases to hold the same investments they purchased years ago.
Read the full article on Financial Planning.