SEC Chairman Michael Piwowar speaks out about the "terrible, horrible, no-good, very bad" Department of Labor Fiduciary Rule.
(Photo Credit: FinancialPlanning.com)
At the IAA’s (Investment Advisor Association) conference SEC Chairman Michael Piwowar candidly presented his feelings on the much talked about DOL Fiduciary Rule. Piwowar’s comments came on the heels of the most recent update in the rule’s saga of uncertainty, as the Labor Department decided to delay the rule by another 60 days.
Piwowar didn’t hold back, telling the conference audience he never liked the rule, stating;
“I think it is a terrible, horrible, no-good, very bad rule… [that] was never ever about investor protection.”
Piwowar thinks the effect the rule would have would be an opportunity for “trial lawyers to increase profits”.
We share in Piwowar’s opinion that the rule would not protect clients, rather it would benefit lawyers and eventually, the costs of litigation would have to be passed onto the consumers or firms will go bankrupt. It is of huge significance to financial advisors that SEC Chairman Piwowar took this stand – it’s a validating sigh of relief and pivot towards a reformatted rule that really serves both clients and advisors.
Are Clients Really Unhappy?
Piwowar continued to explain that a main misconception about the rule was that investors are unhappy with their financial advisors, but really, they are pleased, just confused. Piwowar thinks the many different job titles, like Financial Advisor, Investment Advisor, Wealth Adviser leave little consensus to what the professional is capable of doing. Even different spellings of advisor and adviser all work against advisors by creating deep confusion into job functions and capabilities. But, Piwowar mentions that the title, “Registered Investment Advisor” has a very clear and specific meaning.
Time for a Conversation
Perhaps Piwowar is right and it is time to start a conversation about how we present ourselves to our clients. One of the good conversations the rule has brought up is BICE – as responsible advisors, we have a responsibility to act in our clients’ best interest. While we had many issues with the parameters of the rule, we do feel that this is a good way to start a discussion about how we can better inform our clients of our roles and services by starting with what we call ourselves.