Kill or save the fiduciary rule? Top finance leaders lock horns on regulation

President Donald Trump has landed in Washington, and the ripple effects are hitting two industries the hardest — healthcare and financial services.

So perhaps it’s not so surprising that some experts are using healthcare analogies to illustrate how Trump is making waves in the wealth management industry.

For our latest LinkedIn series, we asked Influencers and top writers to share their thoughts on President Trump’s Feb. 3 order to roll back the 2010 Dodd-Frank law ­— and in a separate action also reverse the Department of Labor’s so-called fiduciary rule that was set to take effect in April.

That controversial rule requires financial advisors to put their clients’ interest first when providing financial advice, rather than advising certain financial products that are tied to higher fees and commissions.

Elliot Weissbluth, CEO of HighTower, responded with “Accept No Exceptions to the Hippocratic Oath – Or the Fiduciary Standard,” an op-ed on LinkedIn comparing financial advisors to doctors, and the oath they take to protect their patients.

“Do you trust your doctor? I love my internist. More importantly, I trust him.”

writes Weissbluth. “That’s partly because he’s a good guy and I’ve known him a long time, but also because of the Hippocratic Oath: the pledge that every doctor takes to do no harm to his or her patients.”

Weissbluth says the DOL fiduciary rule is a kind of financial Hippocratic Oath for advisors, which is commendable, but he says that it is a flawed rule:

“The rule started out with the best of intentions — which I wholeheartedly supported — but scrapping it now may be a good thing. That’s because instead of clarifying the line between fiduciaries, who put the best interests of their clients before their own, and everyone else, the rule blurs it further.”

“The Department of Labor rule for fiduciary duty is under attack from the Trump Administration, and ironically, we’re not that upset that the fiduciary rule may be rolled back or stalled,” Weissbluth said in a separate video interview (see above). “The fiduciary rule as it’s written has the potential to create a lot of conflict and a lot of confusion, both of which we think is not going to be good for the industry.”

Knut Rostad, president at the Institute for the Fiduciary Standard, countered with his piece "It's Time to Save the Fiduciary Rule, and Sunset BICE."

"Weissbluth’s argument is based on a flawed understanding of the BICE. The BICE does not provide an 'exception' to fulfilling fiduciary obligations. It provides an alternative means to meet fiduciary requirements," Rostad wrote.

Betterment’s Jon Stein, founder and CEO of the robo-advisor pioneer, also takes an opposing view with his piece “The Fiduciary Rule Is on Life Support – We Must Act Now.”

“Make no mistake, though, the fiduciary rule is the only realistic hope for prompt action to improve the quality of retirement advice,” Stein writes. “If firms genuinely support the rule’s objectives, they should also support the rule.”

Stein also said a good analogy for what the fiduciary rule means for financial services is the medical industry.

“Doctors aren’t allowed to get paid by drug companies for pushing drugs on you. That would be ridiculous, right?” Stein asked. “Why should it be different in financial services?”

And Influencer Jill Schlesinger, CBS News Business Analyst and host of the “Better Off” podcast, responded to Trump’s memorandum with an entire podcast on the DOL rule. She also followed up with her own interview with Betterment’s Stein.

Regardless of your view, the financial services industry is in the midst of transformation sparked by the new administration set on unwinding regulations set in place after the 2008-9 financial crisis.

“We’re sitting in front of some massive secular changes,” HighTower’s Weissbluth concludes in a video interview. “The fact that I’m here answering questions, and this is now being broadcast, and many people are engaging in this conversation, means that we have successfully begun the conversation with the consumer about educating them and encouraging them to ask questions.”

“The truth will come out, now that this conversation has started,” Weissbluth said.

Stay tuned for our continuing coverage of the evolving regulatory landscape for Wall Street, robo-advisors and the wider wealth management industry ­– and how the Trump presidency is reshaping financial services.

Just follow us on our Banking & Finance channel, and if you want to join the conversation, post your thoughts here using the hashtag #DoddFrank.

Other notable posts on the fiduciary rule and Dodd-Frank include:

"Fiduciary Standard Under Fire with Megan Leonhardt and Jack Otter" by Jill Schlesinger, CBS News Business Analyst and host of the “Better Off” podcast

"Dangerous Stability Threatens America's Banks" by Joshua Brown, CEO of Ritholtz Wealth Management and the Editorial Board at The Reformed Broker

"'You Might Die Younger' Without the Fiduciary Rule" by Bill Harris, CEO at Personal Capital

"Should Dodd-Frank be repealed?" by Dr. Don Capener, Dean, Davis School of Business at Jacksonville University

"Rolling Back the DOL Fiduciary Ruling & Dodd-Frank" by Brandon Spottswood, CEO at AdvisorBid

"Trump, Fintech and the Fiduciary Rule" by Irene Aldridge, FinTech Founder and President, AbleMarkets

"The 'Trump Bump'​, the transition from academia to a business minded government and its impact on the financial system" by Christa Steele, Outside Director

"Trump Dodd-Frank Reform is Long Overdue" by Tom Pelton, Real Estate Broker, Coldwell Banker Previews International

"Financial Services Disrupted: What To Make Out of Dodd-Frank, DOL-Fiduciary Rule, Alternative Facts, And Real Issues" by April Rudin, Global Wealth Marketing Strategist

"Trump Scaling Back Dodd-Frank? Here’s What You Need to Know" by Brittney Kleinfelter, Senior Manager, Synchronoss Technologies