Will a revised fiduciary rule change advisor behavior?

"These payments, these inducements incentivize the brokers to make recommendations that generate the best returns for them but not necessarily the best return for you," President Obama told the AARP audience.

The Financial Planning Coalition, including the Certified Financial Planner Board of Standards, the Financial Planning Association and the National Association of Personal Financial Advisors, said in a statement that given the significant changes to retirement saving since the passage of ERISA, it is entirely appropriate for the DOL to reevaluate the 40-year-old rule defining the fiduciary standard for those financial professionals providing investment advice to retirement savers. "Those who work hard and save for the future deserve financial professionals whose primary concern is the best interests of their clients and not their bottom line."

The primary argument coming from opponents of an enhanced standard, including the National Association of Insurance and Financial Advisors (NAIFA) and the National Association for Fixed Annuities (NAFA), is that an enhanced standard at the expense of the existing suitability standard of care will make professional advice more expensive or outright inaccessible for middle-market consumers, as advisors will be forced to migrate toward more affluent clients.

A Feb. 24 statement from NAFA said that, "while it is laudable to stop bad actors, we are concerned about the potential adverse impacts of the proposal on consumers, small businesses and IRAs. DOL's recent statement that many financial services professionals care more about their personal compensation than the needs of their clients runs contrary to our members' professionalism, existing robust regulation and consumer satisfaction rates."

NAIFA President-Elect Jules Gaudreau, ChFC, CIC, issued a statement expressing concern that a new rule could endanger the business model that has allowed NAIFA members to successfully help their middle-market clients for decades, and would very possibly harm the people it is designed to protect.

"Based on the recent assertions by the Administration, we believe the likely result of the pending DOL regulation will be that professional investment guidance for retirement savings will become more expensive or not available at all for small accounts or individual plan participants. Middle- and lower-market investors would have a hard time finding wealth managers willing to work with them and they would be left without any professional guidance to secure their financial future."

What the DOL's new proposed fiduciary rules will be and when they will be published (mid-year?) remains to be seen. What also remains to be seen is how – or how much – they would change advisor behavior with regard to ethical issues like the shift from a suitability standard to a fiduciary duty, and whether advisors would turn their backs on a middle market that has long been bandied about as a "great opportunity" that is very much in need of professional financial advice.