Originally published on ThinkAdvisor.com, November 10, 2015

By Knut A. Rostad

Today I speak at the 1st Global National Conference 2015 on the DOL Conflicts of Interest rule with three reps of brokerage or insurance firms. After many months where both sides have pretty much just repeated their same talking points, these panels have become mostly predictable.

This panel may be different because 1st Global President David Knoch has urged the panel to address different questions than those normally asked. One such question regards what motivates the DOL and White House to push this proposal and what the White House thinks of advisors.

This is a good question because it gets to not only how industry opponents of the rule and fiduciary advocates for the rule hold different opinions; they aslo have sharply different views of the basic underlying facts and circumstances.

Here’s one example. I will suggest that the motivation behind the rule is that loopholes in ERISA need to be plugged because conflicts of interest are omnipresent in retail investing and conflicted advice can (and often does) harm investors. Further, conflicted advice can really harm investors when combined with opacity of fees and expenses and investor ignorance or misconceptions about what they “get” and what they “pay.”

I will then offer the best guess about what the White House thinks about financial advisors or brokers.

I’d argue it’s actually pretty straightforward regarding BD firms: the White House POV is that BDs exist to distribute product and the best BDs are great distributors because, in part, they provide excellent incentives for brokers and their managers throughout their organizations. Then I will add that my best guess is that their view of brokers or registered representatives is different from their view of the BD firms. It’s also more complex.

One instance where brokers views’ differ from their BD firms is in their respective views of the particulars of the DOL BICE requirements. BD firms generally and overwhelmingly reject them as “unworkable,” while reps are not quite so negative. According to a survey conducted in September by the Institute for the Fiduciary Standard and Wealthmanagement.com, brokers (who accounted for 79% of the sample) are far more favorable to the BICE than the firms that they represent.

The survey sought brokers’ views on the “reasonableness” and “burdensomeness” of certain specific BICE requirements. As to the BICE requirements, on three key issues brokers believe that to “contractually acknowledge fiduciary status in writing,” (56% to 28%); “disclose conflicts of interest,” (79% to 9%); and “disclose expected fees and expenses for one year in advance,” (47% to 38%) are “reasonable” requirements.

Interestingly, survey respondents also believed by a wide margin that it is not burdensome to disclose conflicts in writing. Specifically, to “disclose conflicts of interest via a single document attached to an engagement agreement” is considered to be “easy” rather than “burdensome,” 51% to 24%.

That brokers and BD firms appear to hold such divergent views of core fiduciary requirements may be explained in numerous ways.

One could be that underneath all the talk of gloom and doom they hear from their BDs, brokers don’t like hearing the notion that putting investors’ best interests first is “unworkable” when they also believe doing what the DOL says is required is “reasonable.”