APRIL 4, 2016
It wouldn’t be an overstatement to say that independent broker-dealers spent the first two weeks of March in a state of paralysis, awaiting the final outcome of the Department of Labor’s fiduciary rule, which was expected to come out around press time in April. All other concerns afflicting broker-dealers are taking a backseat right now as they anticipate what could be a fundamental transformation of the brokerage industry.
Smaller firms that rely on commission revenue, especially from non-traded REITs and variable annuities, will be affected the most. The DOL has proposed a ban on non-traded products in IRA accounts and recommended the use of a controversial “best-interests contract exemption” (BICE) for other commissioned products, including existing holdings.
The DOL earthquake comes amid other tremors shaking up two of the industry’s biggest operators—AIG’s Advisor Group, which is in the process of changing owners, and Cetera Financial, which is restructuring.