The Fiduciary Standard Mess

The new “fiduciary rule,” is slated to go into effect April 10, but, the Trump administration is working on a proposal to delay the start date. The rule was one of the signature achievements of the previous administration and was intended to force advisers to think and act as a fiduciary. I am of two minds on all of this.

As previously noted, the rule that is scheduled to become active on April 10, 2017 is 58 pages long and is accompanied by over a 1,000 pages of explanations, exemptions and exceptions. The rule should have been stated in far fewer pages and left almost no explanations, exemptions and exceptions. Those 1,000 plus pages will provide a lot of loopholes for practitioners of bad behavior to continue behaving badly. They also provide a lot of opportunities for the folks who define the meaning of rules like this through the art of litigation.

On the other hand, delaying or eliminating the rule would give the folks who provide financial services and advice to public investors an opportunity to clean up their act without the burden of government definitions and regulations. I know that is wishful thinking.

Either way, there will be an increasing role for the legislators, regulators and litigators in defining what is in the best interest of public investors. There should be an increasing role for someone with forty plus years of trying to think and act like a fiduciary. Call me if you find a need for an expert with all of those years of experience.