The DOL proposal is problematic because of the hoops it forces broker-dealers' registered reps to jump through.

If you count yourself among the many advisors in the fastest growing distribution channel for insurance and financial services, then you probably feel conflicted about the torrent of press coverage in recent weeks over the DOL’s fiduciary proposal regarding retirement planning advice.

You guessed it: I’m speaking of dually registered advisors: those who (1) serve as registered reps of broker-dealers and sell product on commission; and (2) are also investment advisor reps of registered investment advisory (RIA) firms and charge fees for the assets they manage.

If you are struggling with the issue, I empathize. For having to two wear two hats, and knowing which one is on at all times, can be confusing — for you and the client. Don the registered rep, and you’re obliged only to recommend a product that’s suitable. Putting on the RIA hat binds you to a higher, fiduciary standard of care — to act in the client’s best interest — the benchmark the industry is all up in arms about.

At first blush, it makes sense that advisors should be governed by a single, harmonized standard, as the proponents of the DOL rule insist. That would assure consumers consistency in the quality of retirement investment advice for individual retirement accounts — free of commission-induced product bias. And it would (at a certain level) simplify your job: treat all clients the same.

But as we’ve all learned by now, the transition to a harmonized standard would not be so simple — nor pain free. As critics of the DOL proposal have pointed out, the fiduciary rule would upend the broker-dealer business model. How, for example, do you ensure product-neutrality when you have a primary or exclusive relationship with particular providers?

The DOL proposal is also problematic because of the hoops it forces broker-dealers to jump through. As I noted in a story recapping industry associations’ comment letters, clients would first have to sign a best interest contract exemption (BICE) stipulating that (1)  broker-dealer rep is acting in the client’s best interest; (2) the rep’s firm has adopted practices and procedures to mitigate potential conflicts of interest.

If inking such a contract were required at the time of the sale transaction, it might not be so onerous. But to insist on its signing on the outset of a client engagement would turn the sale process on its head — and, no doubt, depress sales.

The DOL proposal, as I pointed out in my earlier piece, has other problems. To name a few: Increased legal exposure for broker reps; the lack of a BICE exemption when advising on retirement account rollovers and distributions; and the limits on education to assist savers with asset allocation and retirement planning strategies.

The sum of the proposal’s requirements, and the additional costs and administrative burdens would, I fear, prompt a lot of reps to leave the business or force them to revamp their practices to cater to a more affluent, fee-friendly clientele.

Which brings us back to financial professionals like you. The ranks of dually registered advisors are growing fast; and that’s reflected in the swelling assets they manage. As Cerulli Associates reported last year February, the combined market share of the RIA-only and dually registered channels is forecast to increase to 28 percent of total assets in 2018 from 20 percent in 2013.

And it ain’t just boutique shops that are fueling the gains. About one-third (36 percent) of practices that are managing $500 million-plus in assets are RIAs and dually registered advisors — a percentage topping that of wirehouses.

Undoubtedly, the flexibility of the dually registered channel helps account for these burgeoning numbers. You can, as the situation warrants, act in purely advisory role for clients needing top-notch (and ongoing) retirement advice. For those who just need suitable retirement product recommendations, you can function as a broker.

It would be unfortunate if this flexibility were lost due the DOL’s fiduciary proposal. On this point, I’m guessing, you don’t feel conflicted at all, yes?