Originally published on ThinkAdvisor.com, June 29, 2016

By Knut A. Rostad

Celebrating Independence on July 4th?
Enjoy the Barbecue – And Vow to Speak out for Fiduciaries

Last month CFA Institute opened its ‘Putting Investors First’ campaign with an open letter in the Wall Street Journal. Noting how much economic damage from “the global financial crisis has been repaired,” the global group of over 130,000 investment professionals still did not pop the champagne. Instead, the second sentence of the letter struck the right tone for assessing finance, and by implication role of the fiduciary standard, “Yet the reputation of the financial services sector remains at a critical low, leaving our stakeholders … understandably ambivalent about their futures.”

This month marks seven years since the Treasury Department urged that broker advice be fiduciary advice and on July 4th the DOL Rule is almost three months old. By all means, enjoy the barbecue, and also vow to speak out and help lead the advisory industry. Help ensure that industry lobbyists don’t become the public face of fiduciary advisors. A quick look at recent past events tells the story.

Key industry lobbyists ardently opposed fiduciary advice in 2009. SIFMA, under the leadership of John Taft, testified to Congress in October 2009 and set out its views of fiduciary in an SEC comment letter in July 2011. The SIFMA testimony revealed a complete misunderstanding of fiduciary by asserting SIFMA supports a standard that is stronger and “more pro-investor” than anyone “we have heard advanced” and then in 2011 setting out a brokerage-sales disclosure standard.

Meanwhile, the Financial Services Institute (FSI) asserted, as noted by FA Magazine on October 6, 2009 “FSI urged House Financial Services Committee members to apply a new universal standard of care to both broker-dealers and investment advisors that doesn’t involve placing any sort of fiduciary standard on broker-dealers.”

Key industry lobbyists ardently oppose fiduciary advice in 2016. FSI proudly explains its support of the lawsuit spearheaded by the Chamber of Commerce opposing the DOL Rule. It asserts, again, the DOL rule is, “Unworkable” and “Will only harm the smaller investors …” Meanwhile, SIFMA president Ken Bentsen asserted, again earlier this month, “The DOL has overreached” in this “costly, complex and very proscriptive rule.”

The DOL walked the walk; key DOL Rule opponents agreed. Secretary Perez said in releasing the rule, “We listened, we learned, we adjusted.” Key DOL Rule foes (yes, foes) agreed. “We are pleased … (DOL) address(es) many of the practical terms raised during the comment period,” said Merrill’s John Thiel. “We are encouraged by the increased time frame for implementation, the ability to easily enter the best interest contract with existing clients and the freedom to recommend any assets…” according to LPL. “It appears the Rule includes modifications that indicate the DOL has has considered some of the industry’s concerns,” according to Cetera Financial Group president, Adam Antoniades.

Finance in 2016: Many firms and lobbyists seek to kill DOL Rule. Business, brokerage, and insurance groups started filing suits June 2 to kill the rule. Why? The rule requiring advisors serve their clients best interest, according to plaintiffs is, among other things, “arbitrary, capricious and violate … the First Amendment.”

Finance in 2016: the SIFMA “debate.” SIFMA, the largest lobbyist for brokerage firms, was not reported to have debated whether it should support the DOL Rule. No, instead, SIFMA had a robust debate with itself over whether to support the lawsuit to kill the DOL Rule, Bloomberg reports. Firms such as Raymond James Financial, Ameriprise, and Robert W, Baird advocated and prevailed on SIFMA to support the lawsuit. Larger SIFMA member firms, such as Bank of America, Wells Fargo, and others it is reported, argued against supporting the lawsuit. There have been no sightings of reports of SIFMA firms arguing for SIFMA to support the DOL Rule.

Based on the loudest voice of brokerages anyway, investors are left to choose between brokerages who merely oppose the DOL Rule and the best interest standard and brokerages who seek to kill it in court.

Finance in 2016: It’s time the ‘silent majority’ turn off the silencers. SIFMA does not speak for all of finance of course. Milder statements of support for the DOL Rule and for the best interest standard from Financial Engines, TIAA, Vanguard and others are important, but may be drowned out.

This is why voices of Carson Wealth Management’s Ron Carson, United Capital’s Joe Duran, Edelman Financial’s Ric Edelman and others matter. Each speaks clearly and sharply on the DOL Rule. Their voices tend to stand out. Ric Edelman, who hardly needs prompting, demonstrated this clarity with something all too rare in the “debate” over the DOL Rule; a straight out and no-holds-bared plain English critique of the industry lawsuits against DOL. It’s a homerun and can be heard on the first few minutes of his show. http://www.edelmanfinancial.com/radio/june-18-2016#ep-nav

The industry firm execs and lobbyists spearheading the DOL lawsuits believe, no doubt, in the virtue of their cause. (That they are the only persons on earth [perhaps some couple hundred in all, of seven billion] believing what they are saying, doesn’t matter.)

What matters is they believe they alone are working to protect small investors and they alone are the only force standing in the way of a federal rule that is, as they assert, “arbitrary, capricious and violate(s) … the First Amendment.” What matters is seven years into this debate over fiduciary advice they remain, the “face of finance” for too many investors. So, by all means, enjoy the barbecue – and then start making a list of what you can do to speak out for your industry and fiduciary advisors.