Brokers who advise retirement investors are bracing for more intense regulation under the Labor Department’s new “fiduciary” rule, and some are already planning to reduce the business they do. The rule is also expected to accelerate a shift toward fee-based investment advice, and is welcomed by some fee-based advisors. [Michael Wursthorn, WSJ] Perhaps less expectedly, the rule could trip up large numbers of persons who less obviously fit the role of financial advisor. John Berlau, Forbes:
Experts both for and against the rule I have talked to agree its broad reach could extend to financial media personalities who offer tips to individual audience members, a group that includes not just Ramsey but TV hosts like Suze Orman and Jim Cramer, as well as many other broadcasters who opine on business and investment matters. They would be ensnared by the rule’s broad redefinition of a vast swath of financial professionals as “fiduciaries” and its mandate that these “fiduciaries” only serve the “best interest” of IRA and 401(k) holders.
One insurance agent, Michael Markey, has written that such media personalities need to “be regulated and to be held accountable” by the government for the opinions he dish out, and “hailed the Labor Department rule as ushering a new era in which “entertainers …can no longer evade the pursuit of regulatory oversight.” Prof. Bainbridge wonders whether there might be a First Amendment issue lurking here, as well as an impulse to support regulation that works to handicap one’s competitors.
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