Wealth Management


Those hoping for a complete end to the DOL’s fiduciary rule should keep their fingers crossed, as despite political pushback, and success on slowing down the rule, the GOP is still working hard to defeat the rule. The newest chance comes in the form of a rider on the current spending bill which is designed to do away with the rule. Previous attempts at doing so have been heavily opposed by Democrats.

FINSUM: We think this one actually has a better chance of getting through. The reason why is that the tide has definitively turned against the DOL rule, and so Democrats may be more willing to give it up as a trade or concession as part of a spending deal.


2017 was a wild year for both the wealth management industry and for its most famous regulation—the fiduciary rule. But what will happen in 2018? The answer is a lot, and not all in the direction some might think. While the DOL rule does feel like it might be on its last legs given the long delay and SEC involvement in developing a new rule, there are some factors which might help it, or at least advance the fiduciary rule cause. For instance, industry buy-in of the rule, especially by big firms, is increasing as they realize it is more profitable to adhere because of higher revenues from fee-based accounts. Additionally, many states are working on their own rules, another factor likely to push federal rule-makers. Finally, the SEC may come out with its own universal rule this year.

FINSUM: We expect it to be another wild ride in the fiduciary saga this year. Our best bet is that the SEC will come close to making a rule this year, but that it will not be implemented until mid 2019.


The battle over client is heating up again. On one side stands the broker, and on the other, the firm. Who owns the client relationship? Both say they do. Some may have been wondering where FINRA stands on the issue. However, the regulator has just taken the easy way out, saying it has no stance on the question. FINRA says it is not involved in the broker protocol and takes no sides on the topic, though it does have arbitration rules to handle disputes. Brokers want a FINRA rule, or at least process on the issue, with one attorney saying “Finra needs to convene an industry conference to finally be able to decide on what’s a workable definition of who owns the customer … There’s got to be a better way of doing this than TROs and arbitration”.

FINSUM: The broker protocol seems likely to completely dissolve this year. Hopefully something workable will take its place, because the legal alternatives are not great for anyone (other than lawyers!).

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