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The lobby group that sued to stop the DOL rule surveyed 1,300 member stockbrokers -- of whom 71% voted for Donald Trump
December 1, 2016 — 8:43 PM UTC by Irwin Stein
Financial advisors -- that's FAs as defined by FSI -- despise Hillary Clinton but they loathe the DOL rule, finds the Financial Services Institute Inc. in its newest study.
A full 86% of stockbrokers want President-Elect Donald Trump to repeal the DOL rule that radically ups the level of care required legally in serving customers, according to the Washington-based lobbyist.
Only 14% thought that it should stay in place. The DOL rule is DOA -- and that's just the beginning, says RIA champion Brian Hamburger, law school chum of odds-on chief of staff Reince Priebus
FSI represents more than 100 independent financial services firms with more than 160,000 affiliated financial advisors – or more than 60% of all producing registered representatives. See: LPL reconsiders FSI as it drops out of its board, offers own DOL stand and hires own lobbyist
The survey based on the responses of 1,357 FSI members also found that 71% of the respondents voted for Donald Trump. In Alabama, Trump won 62% of the overall vote during the election. Only 19% of the FSI respondents voted for Democratic candidate Hillary Clinton and 10% either voted for a different candidate or didn't respond to the question.
“Advisors overwhelmingly want President-Elect to repeal DOL rule” The headline of the release announcing the study reads: -- a representation that completely ignores the needs of investors, says Knut A. Rostad, president of the Institute for the Fiduciary Standard in McLean, Va.
“The FSI headline is laughable. Sounds defensive. It should be," he says. "Especially when you talk to small investors in Wisconsin, Pennsylvania and Michigan. The results of this poll are about as surprising as “NRA members overwhelmingly want President-Elect to NOT repeal 2nd Amendment.”
Rostad suggests that “the FSI executives need to get out more and survey the small investors.”
But FSI president and CEO Dale Brown says that members views “driven by their clients" need to access their help in securing a dignified retirement.”
Pleas for relief
FSI spokesman Chris Paulitz says that clients with smaller accounts would be the big losers if the fiduciary rule goes into effect.
Last year, FSI members sent 5,000 letters to the White House and had their clients send over 100,000 letters to the Department of Labor pleading for relief from the rule.
This year, the FSI is the plaintiff in one of the five lawsuits that have been filed against the DOL to stop the fiduciary rule from taking effect. “We filed the lawsuit to win, not to make a statement or lambaste the DOL,” Brown said in a Skyped-in speech. See: Jaws drop after Dale Brown Skypes keynote address
Paulitz also decried the vagueness of the DOL rule which requires firms to act “reasonably” and warned of “untold liability exposure and class action lawsuits."
Twenty-one percent of those responding to the poll expect to leave the business in the next five years. Of those, 12% cite the DOL fiduciary standard as their reason for leaving. See: One security lawyer's unvarnished take on DOL's 34 answers to 34 questions and what unsettles him about them
That said, Paulitz still expects that “all FSI member firms will be in compliance by April when the rules take effect and that their business "will not substantially be hurt.”
Rostad believes that the firms will do as little as possible to comply with the rules and takes a show-me attitude toward the previously unseen wirehouse showmanship on display.
“Merrill Lynch is advertising that they support and will follow the spirit of the fiduciary rule putting the interests of the customer first. Twenty to 25 years ago the industry was advertising that they wanted to obtain the clients’ trust. What’s changed?” Rostad asked. “At the end of the day the firms will be judged by what they actually do rather than their advertising.”
LPL Financial will move forward with the planned changes to its commission structure, Casady told the Boston Business Journal last Thursday after a Greater Boston Chamber of Commerce event. LPL and DOL have not been of one voice on this issue -- though closer when details of their stands are observed. LPL reconsiders FSI as it drops out of its board, offers own DOL stand and hires own lobbyist
“Our changes are all going to stay, because they’re smart business changes and they’re smart compliance changes,” Casady said. “It is about lowering costs for investors, and that makes us more competitive in raising assets, for example, and it helps from the Department of Labor standpoint in terms of what they’re trying to do.”
Casady then walked back some of those pro-DOL rule comments, telling the Boston Business Journal he'd like the agency to cap liability faced by advisers.
The LPL CEO added that he'd also like to strip the DOL rule best interest contract in favor of a uniform disclosure document.
The poll was taken one week after the election. Seventy-one percent of respondents voted for Trump, the Republican candidate. Notwithstanding their votes, only 58% of the respondents thought that 2017 would be a strong year for the U.S. economy and slightly less, 56%, thought 2017 would be a strong year for equities.
FSI has joined a consortium that includes the U.S. Chamber of Commerce to sue the DOL.
“We filed the lawsuit to win, not to make a statement or lambaste the DOL,” Brown said. See: Why SIFMA & Co.'s trip to a friendly North Texas court to upend the DOL rule looks more like its Alamo.
Brown allowed in the speech that until such a legal victory is gained that the FSI “is in a vexing position in that our members will have to spend time, money and resources to comply with a rule that we hope gets vacated.”
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