May was the Putting the Investors First month. At CFA Society New York, we put together an event entitled Conflict of Interest Rule (Fiduciary Rule) Unwrapped on May 31.
The panel had a very active debate both for and against the new fiduciary rule. There are many perceived controversies there but there is one point on which everyone seems to agree. The new rule is most likely going into effect next April. So now that we agree on by when we need to have it in place, how do we apply it? The required steps are so complex that the process looks like a huge decision tree. If I were one of those who has to worry about this new rule, I probably would be crossing my fingers right now hoping that every exemption applies to me so I don’t have to worry about it…
The definition of investment advisor where the fiduciary rule applies is much broader now and will have significant impact on how investment products are sold in the retail retirement space. Firms likely will have to devote more resources to adhere to the new rule in an environment where legal and compliance people are already stretched from other regulations that came into place in the recent past. There may even be some products and roles that may not survive the new rules. Maybe it is always the case whenever new rules and regulations are introduced and we may even see new products and roles as a result, but at the moment, the focus is on how tough this change will be. Let’s see where we will be 2 years from now!
I would like to thank Michael Livian, CFA, Janet J. Mangano, @Gregory Dienna, Ravi Chandran, CFA,Carole K. Crawford, CFA, @Daniel M Rodgers for organizing this event and Mickie Chow to provide content for me to do this write up.