Ferrara in The Hill: DOL’s fiduciary standard: Good for clients; workable for advisers

The Hill recently published an op-ed by Ray Ferrara, CFP®, Chairman and CEO of ProVise Management Group LLC, former Chair of the Board of Directors of CFP Board, and a former FPA Board Director, endorsing the Department of Labor’s (DOL) proposed fiduciary rule. Ferrara also testified during an August 10 hearing on the rule, convened by the DOL’s Employee Benefits Security Administration.


Earlier this year, the Department of Labor (DOL) re-proposed a rule that would require financial firms and advisers providing retirement advice to do something the vast majority of consumers already believe they are required to do: provide advice that is in the best interests of their clients.

While many advisers strive to do the right thing even though they are not legally required to do so, incentives to sell products often conflict with best-interest advice to clients. The DOL’s common sense proposal to require those who provide retirement advice to function under a fiduciary standard has unfortunately been met with strong opposition – primarily from financial industry groups. They say the rule is “unworkable.” I disagree. What is unworkable and should not continue is the status quo: a regulatory framework that allows for advice that is not in the best interest of clients and that erodes the retirement savings of millions of Americans.

The DOL’s proposed update of its rule is long overdue. I began my career four years before ERISA became law 40 years ago. There were no Individual Retirement Accounts (IRAs), let alone 401(k) plans; many people relied on their pensions; and stock ownership was the province of the well-heeled. Today, that’s no longer the case. Pensions are almost a thing of the past and individuals are required to take on greater responsibility for their finances, including making choices from among increasingly complex financial products to save for a comfortable retirement. Today, American savers invest more than $14 trillion in 401(k) plans and IRAs.

With this shift in responsibility for retirement planning from employers to individuals, the public has lost an important safety net. Now more than ever they need competent and ethical financial advice from professionals they can trust. Research shows that they want and expect this advice to come from people who are going to put their best interest first.

Opponents to the DOL’s fiduciary rule suggest that the rule will limit advisors’ and firms’ ability to serve middle-class retirement investors and will hurt small businesses. This is not consistent with my personal experience.

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