Dick Lampen, chair of the Financial Services Institute’s board of directors, set the tone for FSI’s OneVoice conference Monday by saying “I have to compliment the new administration” for its willingness to revisit the Department of Labor’s fiduciary rule. While lauding the rule’s intent — “we share the same goals” as DOL — the president and CEO of Ladenburg Thalmann said of the rule: “The mechanics don’t work,” and that FSI will “work to vacate this destructive rule.”
The president and CEO of FSI, Dale Brown, followed Lampen’s lead at the opening session of the conference in San Francisco by disclosing that “over the last few months, we’ve had multiple conversations with the Trump transition team.” Brown characterized the memo sent Friday by White House Chief of Staff Reince Priebus to freeze any new or pending regulations as the “first step to delay the rule,” though he was quick to say the freeze was not specifically directed at the DOL rule (freezing regulations to allow a review of them is standard practice for a new administration).
But Brown said that there was “not enough certainty” that the rule would be delayed or repealed for independent broker-dealers to “slow down your compliance efforts.” He proclaimed to the audience of independent broker-dealer executives that “we’re committed to adopting the fiduciary rule for all financial advisors, but this is the wrong rule.”
In a media briefing early Tuesday, Brown and other staff members of FSI addressed the DOL rule in the context of the group’s growth and advocacy successes on both the federal and state levels.
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First, Brown disclosed that “once we were clear as to the election’s results,” FSI reached out to Trump transition team members. In what he characterized as a number of significant meetings with Trump officials — it wasn’t the case of having “one conversation in an elevator” with a lower-level staffer, he said — the FSI received a clear message.
“They understand the critical importance of this issue,” Brown said of the Trump team, and of the DOL fiduciary rule’s “critical impact on access to advice” and preserving “client choice,” particularly for “Main Street investors.”
Brown said that FSI has been “pursuing parallel tracks” regarding the rule: advocacy, including the IBD group’s decision to challenge the DOL fiduciary rule in court, and to be a “critical resource to our members as they prepare to comply” with the rule. FSI’s suite of tools to help comply with the rule, Brown reported, has shown “extremely high subscription” levels.
In response to a reporter’s question on what, exactly, FSI was advocating, Brown said that the “critical first step” would be that the administration “must delay the April 10 deadline” to allow it to “come up with a workable alternative.” The Securities and Exchange Commission, Brown said, is the proper agency to “create a uniform fiduciary standard.” As for the SEC itself, which will be gaining a new chair under the Trump administration, “we think Capitol Hill will give the SEC more direction,” Brown predicted.
In addition, Brown said the FSI’s joint lawsuit against the rule “is still pending; we’re expecting a decision any day. Victory there would be the most efficient way” to vacate the rule. If the rule is “not delayed, the loser,” Brown said, “will be Main Street America.”