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Don Trone's 7 reasons why the DOL rule is flawed to the point of 'folly'

Hurling jabs at opponents and proponents alike, the fiduciary maven says both sides failed to recognize and incorporate the role of RIAs

Author Guest Columnist Don Trone April 15, 2016 at 5:40 PM
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Don Trone: 'Acting in the best interests of others' is a principle. It only takes seven words .... The DOL uses 1,000 pages of rules to kill the concept.

RIA Compliance

Adam Frasier

Adam Frasier

April 15, 2016 — 6:29 PM

We are drowning in corporate bureaucracy and stifling innovation in our country. We take a simple concept and completely destroy it and we wonder why our advanced system is losing to more straightforward approaches. Just take a look at our tax code, make something so complex no one understands it, no one can properly advise on it yet ignorance of the law isn’t an excuse?

Complexity Equals Corruption! We have a tax code of nearly 80,000 pages; even the French have less than 2,000 pages. And we were going to expect something different?

Jamie McLaughlin

Jamie McLaughlin

April 15, 2016 — 9:50 PM

Well said, Don.

Misère, égalité, fraternité.


Stephen Winks

Stephen Winks

April 15, 2016 — 10:57 PM

The complexity is attributed to regulators trying to make the brokerage industry something it is not. Perhaps the solution and simplicity is achieved by an entirely different, separate and distinct advisory services business model that is lower in cost and more technically competent in advisory services than brokerage is willing to go.

Robb Smith

Robb Smith

April 16, 2016 — 12:35 PM

Unfortunately, SCW, this new “solution” has already been born by the White House and DOL and is much more ominous than the in-fighting our industry continues to engage in. It’s called the federal and state government and their unprecedented intrusion into and direct – albeit unfair – competition with the private-sector retirement industry.

And, oh yes, all this bickering about a fiduciary standard? It just disappears under this new solution as both the feds and states have been exempted from ERISA by the same regulator that has continually chastised those in the private-sector who do not meet such high standards.

I am not yet convinced that the DOL rule was watered down solely for the sake of appeasing the brokerage industry when it was clear the DOL had solid victory in-hand. What is becoming clear is that neither side of the fiduciary argument is satisfied which promulgates continued in-fighting and divisiveness within the private-sector retirement industry, just what the doctor ordered if your final aim is its demise.

Stephen Winks

Stephen Winks

April 18, 2016 — 2:56 PM

Shouldn’t the expectation of the consumer be that every recommendation is in the client’s best interest? If so there is no difference between taxable and non-taxable accounts. Essentially there would be no difference in cost or compensation in taxable and tax exempt accounts. Of course this is not the case, as the same consumer protections available for non-taxable accounts are not available for taxable “retail” accounts. This exposes the fallacy of the brokerage lobby (including the SIFMA and FINRA) which advance the self interest of the industry (avoidance of fiduciary duty) over the best interest of the investing public.

Doug McDonald

Doug McDonald

April 18, 2016 — 4:10 PM

Too bad that they did not legislate “growth of the economy” while they were at it.
LET’S SEE..how do you spell sclerosis (?) of the “free markets”..??

Jeff Harrison

Jeff Harrison

April 19, 2016 — 10:59 PM

There is a famous quote from Lenin about “...taking two steps forward and then one back…”. Hopefully this was just the first step of many leading to a measurable workable enforceable definition of the client’s best interest. That would be a very real, and much needed, step in restoring the publics trust.

Whether or not the standard should be that of a fiduciary, something the public does not understand or appreciate or that of a reasonable investor is just as important a discussion as making sure that the guidance is clear and serves the public well.

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