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Edelman Boss Reveals DOL Rule Impact at Top RIA

By Crucial Clips     August 9, 2017
The following text is a transcript of a portion of a speaker's presentation made at an industry conference or during an interview. This transcript solely represents the view of the individual who spoke, and not the view of Financial Advisor IQ or any other group.
Source: FA-IQ, Jul. 31, 2017 

RITA RAAGAS DE RAMOS, SPECIAL PROJECTS MANAGER, FA-IQ: Hello, I’m Rita Raagas De Ramos from Financial Advisor IQ, and with me today is Ryan Parker, CEO of Edelman Financial Services.

With the DOL Rule there’s a lot happening, and it’s basically still in limbo. Even if we saw it initially implemented in June—and it’s expected to be fully implemented in January of next year—there’s a lot happening in the sense that the DOL is reviewing it, the DOL and the SEC are asking for public comments, you have industry groups commenting.

I wanted to ask you, what do you think, first of all, of the DOL Rule? Do you think it’s a step in the right direction?

RYAN PARKER, CEO, EDELMAN FINANCIAL SERVICES: The thing is, our industry shouldn’t need a rule to put our clients’ interests first. And so any rule that does make sure that we’re serving our clients’ best interests and we have ways that they can understand what that is, is a step in the right direction.

RITA RAAGAS DE RAMOS: Do you think that all this uncertainty and confusion is causing some disruption to the industry and to the investors, or do you think that this is just noise in the background and everything is business as usual?

RYAN PARKER: Well, I hope it’s not business as usual, and it certainly can’t be noise. And one thing, this has actually helped to raise a conversation that’s really important. Many people don’t understand the difference between fiduciary or suitability, but now investors can really ask the question, are you serving my best interest? And then, how can you prove it? And that’s a healthy piece of that.

There’s also a lot of things happening in the industry as people really rethink their business models, have to rip out their old wiring and processing or even change their entire product menu, or, as many RIAs are doing, you simply have to look at what you’re doing and make sure that your already-fiduciary status has been tweaked and adjusted in ways to make sure that you can comply with the rule, no matter how it nets out.

RITA RAAGAS DE RAMOS: How has this impacted Edelman?

RYAN PARKER: I’d say it impacted us in two ways. One is it’s another platform for us to be able to talk to and educate both our clients as well as consumers in general about the things they should be thinking about for their own personal finance. And anything that allows for that platform creates a healthy conversation.

Internally, we made sure that we looked at our processes, our tools, the way we were training our people to really ensure that—even though we have always been acting as fiduciaries in the best interest of our clients — that we’re doing so specifically as it pertains to the specifics around the rule.

RITA RAAGAS DE RAMOS: If there were an ideal situation, what kind of regulation would you like to see?

RYAN PARKER: An ideal situation would be one that would be simple and easy to prove that the industry was acting in clients’ best interest and could establish the foundation of trust and integrity that are necessary.

But we don’t spend a lot of time looking at wish lists what might happen with regulators. We spend the time making sure that we’re doing the right things for our clients and paying attention to what the trends are happening in regulation so we can stay current.

RITA RAAGAS DE RAMOS: So right now the DOL Rule is limited to retirement advisors for retirement accounts. Do you think that it should be expanded to all advisors and all kinds of accounts?

RYAN PARKER: Yes.

RITA RAAGAS DE RAMOS: Why do you think that to be the case?

RYAN PARKER: Well, then, for one, it would be simpler. There would be less confusion about what standard applies to what type of an account, and it would be a step in the right direction, which is really, no matter what, it doesn’t matter if a dollar is qualified or nonqualified: an advisor should act in the best interest of their clients, and part of that is looking across the way that their assets are situated and giving them advice that allows them to meet their goals.

RITA RAAGAS DE RAMOS: Do you think that that is a direction where the regulation will be headed, or do you think there will be more resistance in that case?

RYAN PARKER: Well, I sure hope there isn’t resistance, but you never know what pockets that might come from. And I think it is the direction. As the SEC takes up and looks at the issue once again, as the DOL has got to really look at the rule here in the next several months, I think you’re going to continue to see the right questions asked.

Really, the question for me is, are they able to take that into rulemaking and policy that is pragmatic, that actually has the investors’ best interest in mind, and actually will beat back the forces that are trying to resist, sometimes for not the right reasons?

RITA RAAGAS DE RAMOS: Thank you, Ryan.

RYAN PARKER: Thanks, Rita.