While much of the wealth management industry cautiously mulled over the potential impact of the fiduciary rule, digital-first firms were quick to celebrate.
Sitting on the very panel in Washington as the rule was dissected was Christopher Jones, chief investment officer at Financial Engines. The moment in history wasn’t lost on him.
“Today was a pretty momentous occasion in financial services,” Jones says. “I am excited about the impact this will have on the industry in the longer term, such as curbing some of the consumer-unfriendly practices that have existed for years.”
Digital advice providers, financial planning software firms and digital service providers largely voiced their support on social media and on their websites for the Department of Labor’s rule.
Min Zhang, CEO of Totum Wealth, notes that when an advisor helps the client understand the tradeoffs between best interest contract exemptions and fee-based advice, “it shouldn’t just be about the fees visible to the client, but should compare net returns on all fees.”
Zhang also recommends conducting comprehensive know-your-client research with an approach that better engages the client and does not rely solely on automated questionnaires. “While conforming to the new rule looks daunting, it’s not rocket science,” she says.