Wealth Management


There has been a flourish of fiduciary rule-related activity over the last couple of weeks. While the SEC and DOL have been very quiet about their progress on a new rule, Massachusetts and other states have been busy prosecuting and formulating their own rules. Now, a new rule has emerged: Maryland is meeting today to decide whether to make a new rule that would compel all brokers (not just advisors) to adhere to a fiduciary standard. A Senator from Maryland says “In Maryland, we’re trying to do our part to protect our citizens from financial abuses”.

FINSUM: The DOL and SEC need to hurry up and get a new rule out, or at least do some handholding with the states to get them to delay their own rules. The leadership vacuum is causing a flourishing of state-based rules which will fragment the wealth management industry. That situation is helpful to no one.


The fiduciary rule is starting to throw its weight around despite the fact that it is only half-implemented and very much on the regulatory rocks. Massachusetts is currently going after Scottrade under the rule, and now Barron’s says there will be another victim—annuity sales. The asset class saw its total sales fall 8% in 2017 to $203.5 bn, and those figures are expected to fall further this year unless the fiduciary rule is reversed. “The impact to IRA annuity sales was much more pronounced than nonqualified annuity sales”, says an industry expert.

FINSUM: This is a huge market that is being eroded by the rule. Hopefully the SEC and DOL come in with a new rule this summer.


None other than Eugene Scalia, son of former Supreme Court justice Anton Scalia, has now written a formal letter asking that the courts expedite their ruling on the fiduciary rule. Scalia says that Massachusetts’ new attack on Scottrade is a sign that the rule needs to be settled once and for all, as having it half-implemented means heightened legal risk. The wealth management industry has been waiting several months for a final decision on a fiduciary rule case in the Fifth Circuit Court of Appeals in New Orleans. Scalia called for urgency, saying “The action also shows that the fiduciary rule is exacerbating the risk of litigation, even absent 'best-interest contracts”.

FINSUM: There is absolutely no point to having a half-implemented rule. The government (courts included) either needs to fully implement a rule, or get rid of the concept entirely, because the half-in nature of today’s arrangement if not beneficial for anyone.

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