Report pegs cost of DOL fiduciary rule at $3.9B for advisors

Among the report's additional findings:

• The DOL has dramatically underestimated the compliance cost of the new rule and how difficult it will be for small firms to survive if it is implemented.

• The proposed rule will result in estimated startup costs ranging from $1.1 million to $16.3 million per firm, depending on firm size.

• Broker-dealers and investment advisors would be forced to either substantially change their current business models or navigate the challenging demands of a new "Best Interest Contract Exemption" (BICE).

• The rule will result in less access to advice from financial advisors for small and medium-sized investors. One unintended consequence: minority investors with small asset holdings will have a harder time seek advice from financial advisors.

• The proposed rule will result in industry consolidation that will likely force small broker-dealers out of business.

• An expanded potential for systemic risk in the retirement savings market as savers are increasingly pushed into the same set of standardized "low-cost" assets.

The report represents a close reading and critique of the Department's Regulatory Impact Analysis, acknowledging comments published on the topic. Oxford Economics also conducted data gathering with the help of FSI, a professional organization representing independent financial services firms and independent financial advisors.

See an executive summary of the report here.