Do you know what’s going on in Washington? I’m not talking about health care reform. I’m talking about a slew of potential legislative changes that could have a far-reaching impact on the financial services industry. Larry Barton, Ph.D., president and CEO of The American College, is among those who think it is important that you know.
I spent Tuesday morning in Bryn Mawr, Pa., interviewing Dr. Barton for a feature story which will appear in the April issue of Life Insurance Selling. Among the many topics we covered was his strong belief that advisors need to be aware that there are a lot of folks in Washington who are looking to rewrite the rules of what it means to be a financial advisor.
While they may be well-intentioned and there is no doubt room for improvement in the system, there is a danger lurking in the form of potential restrictions on commissions, additional layers of regulation and an expanded fiduciary standard. Do changes like this have the potential to have a significant negative effect on your practice? You bet they do. Do they have the potential to damage consumer choice and access? Certainly.
Dr. Barton said advisors need to get involved in the process or risk seeing swift regulation passed that may end up hurting the very consumers it was intended to protect. He warns there is a lesson to be learned by what happened to the insurance industry in the U.K. and Australia, where some well-intentioned people came in and rewrote the rules which effectively destroyed the insurance market in those countries.
Regulatory reform in the financial services industry does not have to be a bad thing. But it likely will be if a one-size-fits-all fiduciary standard is enacted. As Dr. Barton said on Tuesday, “A quick bill is just imprudent.”