Cooley: Fiduciary Rule Better Protects Investor Interests
The Department of Labor’s new rules advance investor interests without imposing excessive costs on the financial-services industry, writes Morningstar’s Scott Cooley.
On April 4, the Department of Labor (DOL) published its long-awaited fiduciary rule, officially called “Definition of the Term ‘Fiduciary’; Conflict of Interest Rule—Retirement Investment Advice.” It should be no surprise that an agency that turns “fiduciary rule” into a 12-word title was similarly verbose when it detailed how advisors should interact with their retirement clients: Where you and I would have said “Act in your clients’ best interests,” the DOL generated a manifesto that, with associated documents, explanations, and exemptions, runs to more than 1,000 double-spaced pages.
So, the DOL will not win any awards for brevity. But it does deserve some sort of prize for developing a final rule that will advance investor interests without imposing excessive costs on the financial-services industry—which, of course, would have passed on the costs to investors. With that in mind—and despite some much-criticized concessions to the financial-services industry versus the DOL’s May 2015 proposal—I believe that the final rule better protects investor interests.