Good morning (Mrs./Mr.) Client this is your Sales Person

Good Morning

Hard to imagine using the words, "Sales Person", instead of Financial Advisor? As crazy as it seems to us there is a real possibility this will be on our cards in the near future.

PFGC's blog, link below, covered this issue in June of 2017 and stated that the new SEC Fiduciary Rule would be a lot closer to the BIC standard than the Suitability Standard. If reports are to believed very soon Financial Advisors will be forced to identify themselves to clients by what standard they are working under. Adviser/Advisor or Sales Person?

https://www.blogger.com/blogger.g?blogID=4582280342037209616#editor/target=post;postID=7427197525600435201;onPublishedMenu=allposts;onClosedMenu=allposts;postNum=7;src=postname

Let's explain. The Investment Act of 1940 stated that if an Adviser takes a fee for advice we are fiduciaries. The Industry for years, decades, fought and won a proviso which was referred to as The Merrill Rule. The Merrill Rule was simple. Financial Advisors could be paid in fees and not be a Fiduciary. The Fiduciary Industry fought for years with the SEC/FINRA to no avail and finally sued the U.S. Government, in court, for not enforcing the laws of the United States. And really to no one surprised the Fiduciary Industry won around 9 to 10 years ago. The Courts ordered the SEC/FINRA to set the standard. 

The Financial Industry then went into the four corner offense, in other words stalled, for another 10 years. Interestingly ERISA Accounts did not fall, legally, under the SEC/FINRA. So President Obama ordered the DOL to come up with a fiduciary standard for ERISA Accounts. We have all lived through this process but let us clarify the role of the courts. The Financial Industry lost decisively in the Dallas Federal Court last year and then appealed to the New Orleans Court and that decision is expected maybe next month or in March, after the Mardi Gras. First things first in New Orleans. This lawsuit is separate from the Fiduciaries suing the U.S. over the 1940 act. The Financial Industry claimed that the rule was hurried through with no input from the Industry. Unfortunately the DOL was in the works for 7 years and the courts ruled that they followed all the rules and everyone had time to comment. The interpretation of the Courts ruling was that the Financial Industry lost decisively.

http://www.investmentnews.com/article/20180110/FREE/180119989/court-decision-on-dol-fiduciary-rule-expected-in-february 

I don't think think the Financial Industry is looking forward to the decision. At all.

Yesterday Investment News, link below, published their thoughts on what the SEC will announce in the next couple months. There is a lot in the article but the second to last sentence caught my attention. See below. If this is true, I say if, then we have a problem. 

https://mail.google.com/mail/u/1/#inbox/16083c148c7a20da?compose=160e532ba9df9713

The SEC’s fiduciary rule proposal may ban brokerage firms from allowing their salespeople to call themselves financial advisers unless they accept a customer-first fiduciary obligation,  according to the “Journal.”

The link below is also from Investment News from December of 2017 which states that 40% of client assets are on a fiduciary platform. Hence the challenge. We must be aware that if we want to portray ourselves as Advisers we must move as quickly as possible to a discretionary platform. Nothing indicates that we will be given a pass.

https://advisorhub.com/fiduciary-standard-governs-40-retail-assets-cerulli/

There has been a lot of thunder and lighting about the DOL and fiduciaries. Most of what I read are uninformed opinion from FAs with an axe to grind.  But soon it will not be thunder and lighting, ie above our pay grade, but a reality that we will be asked to deal with.

So take a first left-footed step today and control your own future. Start your CFP and move to a discretionary platform. PFGC believes in 10 years we all will have to be minimum a CFP. Take tha step today.

Danny