The implementation of the fiduciary rule has turned into nothing short of a political debacle, all driven by the DOL, an organization which has usurped the regulatory right to even make such a rule. Forbes has just put out an article showing why the whole mantra of the DOL’s rule is a lie. The idea that fee-only advisers are free of conflicts is false, as they have them just like commissioned brokers. For instance, since fee-based advisors make money from total assets managed, they would have a major conflict of interest when advising whether to pay off a mortgage or roll over a 401(k) to an IRA managed by the advisor, both very common situations. Furthermore, fee-based advice is hugely expensive, costing retirees much more over the life of the relationship than commissions would.
FINSUM: We fervently agree with Forbes’ take on this. Yes, brokers with commissions have conflicts, but so do more-expensive fee-based advisors. We should not have a rule that falsely idolizes the latter.