By Jonah A. Toleno, Esq. of Shustak Reynolds & Partners, P.C. posted on Friday, November 11, 2016.

Jonah A. Toleno

Of Counsel

Location: San Diego, California
Phone: (619) 696-9500 (Ext. 104)
Direct: (619) 501-6483
Email: [email protected]

Many in the financial services industry likely are wondering what’s in store for the U.S. Department of Labor’s Fiduciary Rule, which will take effect on April 10, 2017. The Fiduciary Rule requires financial advisors who advise clients on retirement plans such as 401(k)’s to put clients’ interests above any of their profit-driven motivations and to disclose any conflicts of interest.

Prior to his election, Donald Trump indicated he would repeal the Fiduciary Rule if he took office. Many opposed to the Rule believe it will limit clients’ investment options and hurt middle class retirement savers. They accordingly are anxious to know whether Trump will repeal it, particularly since President Barack Obama vetoed a resolution in June that proposed to quash the rule.

Following the election, experts now disagree on whether Trump actually will repeal the Rule. Some industry analysts believe Trump has bigger fish to fry, including addressing Obamacare and Supreme Court nomination(s), which will assume priority over the Fiduciary Rule. Others think Trump will, at a minimum, delay the Rule’s enactment through appropriations.

Regardless of Trump’s course of action, one thing is for certain. The Rule, even though not enacted yet, will cause a substantial effect on broker-dealers’ business models. Its finalization already has caused brokerages all over the country to spend millions of dollars in reorganizing systems, implementing new strategies for investment advice, and training advisors on Rule compliance.  Advisory firms no doubt will be following the Rule’s development closely, seeking guidance on whether to continue spending significant sums of money to comply with the Rule once enacted.

Shustak Reynolds & Partners P.C.’s FINRA attorneys and financial services lawyers in San Diego, Irvine, Los Angeles, San Francisco and New York have extensive experience representing brokerage firms, RIA firms, high-net-worth investors in a variety of securities disputes, including FINRA arbitrations, petition proceedings to vacate or confirm arbitration awards, FINRA and SEC investigations and enforcement actions. Contact us today for a confidential consultation.  

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