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Commentary on the Department of Labor (DOL) Fiduciary Rule


Craig Howell has spent the last seven years in business development with Ubiquity Retirement + Savings, a FinTech organization focused on delivering simple, low-cost, retirement savings plans for small businesses and their employees.


April 14, 2015 at 7:10 pm
Retirement News


Being the primary tax-privilege vehicles for millions of Americans’ to save for retirement, Ubiquity Retirement + Savings believes all retirement accounts – Individual Retirement Accounts (IRAs) and 401(k)s – deserve equal protection.

It’s hard to argue that advice provided in the client’s best interest combined with clear disclosure of conflicts-of-interest shouldn’t help achieve that goal. These protections are truly in the best interest of the consumer.

Prior to the Department of Labor’s (DOLs) Tuesday announcement, the industry presented two credible arguments for potential unintended consequences that, it argued, would price lower-balance retirement accounts out of the market:

Restriction of compensation models would price advice beyond the means of many low–balance accounts. The DOL allowed for the continued use of a variety of compensation models, including commissions, and 12b-1 fees[1]. This takes this argument off the table.

The cost of adherence would drive some broker/dealers and financial institutions out of the market of delivering advice on IRAs.  That may be true, however, there is no shortage of business models or financial professionals offering advice, innovation, and improvements in technology that allow for the better delivery of that advice, which clearly weakens the argument. If one legacy organization can’t provide advice in the customer’s best interest and make money too, then there is an emerging technology that certainly will.

In addition, the DOL provided exemptions for order taking and education. Those are both important to call out on fundamental level.

From our industry’s perspective, change is difficult for long-standing interests who may benefit from status quo. From a consumer’s standpoint and a retirement saver’s standpoint however, this is a big step in the right direction.

Ubiquity is in ready position, and is historically built on modeling our business after placing the best interests of all our retirement savers – both 401(k) and IRAs – while adhering to the conflicts-of-interest disclosures.

[1] Investopedia definition of 12b-1 fee: An annual marketing or distribution fee on a mutual fund. The 12b-1 fee is considered an operational expense and, as such, is included in a fund’s expense ratio. It is generally between 0.25-1% (the maximum allowed) of a fund’s net assets. The fee gets its name from a section in the Investment Company Act of 1940.