Fiduciary Hope: A Look into the Future of the Fiduciary Standard

Phyllis Borzi is the former Assistant Secretary for Employee Benefits Security of the United States Department of Labor. As the official in charge of the Employee Benefits Security Administration in the Obama administration, she helped draft the now vacated DOL Fiduciary Rule. When asked to consider where the industry and regulators will be on the fiduciary issue, you can understand her pessimism “Where I think we’ll be on a fiduciary standard in 5 years is sadly in a worse place than we are today,” she says. “I hope I am wrong.” For her complete answer, including the specific reasons why she feels we’ll be worse off, read “Why Phyllis Borzi is Now Pessimistic On the Plight of a Uniform Fiduciary Standard,” FiduciaryNews.com, September 12, 2018).

It’s complicated. It’ll only get more complicated in the future.

That being said, it helps to fill in the story with a few more details. “We live in an increasingly complex world,” says Fred Reish, Partner/Chair of the Financial Services ERISA Team at Drinker Biddle and Reath in Los Angeles, California. “While that applies to life generally, it is specifically true of financial services. As a result, people who work on financial services, such as broker-dealers and investment advisers, have the advantage of ‘information disparity.’ In other words, they have so much information about investments and financial services that investors need to rely heavily on their recommendations. As a result, those advisors necessarily hold a position of trust and confidence relative to investors, including fiduciaries of small retirement plans and participants in retirement plans. ‘Trust and confidence’ is, in a sense, the definition of ‘fiduciary.’ Because of that, my ‘fiduciary hope’ for five years from now is that advisors in the financial services world will be held to a standard that investors can justifiably place their trust and confidence in those advisors.”

Continue reading here: What Will the Fiduciary Standard Look Like in Five Years?