Following Merrill's lead on fiduciary advertising
While there is uncertainty over whether the Department of Labor's fiduciary rule will become a reality under Donald Trump's administration, wealth management firms are still making preparations for the regulation's implementation.
Industry firms are showing this by getting ahead of the rule. Firms have been stating their intention to keep or eliminate commission-based accounts, whether to use the best interest contract exemption and, with the release of the regulator's guidelines, Morgan Stanley was the first to eliminate back-end bonuses in their deal. It’s a bit of a mad scramble of positioning f or firms in an effort to streamline the process and reduce confusion for adviser and investor alike. Strategically, there is a public relations conundrum, which begs the question, how does one spin this news positively?
An initial fear and concern is commissions will decrease for many advisers with these accounts and some will be and should be concerned for their jobs. For advisers and recruiters alike, there is deal-fear, particularly with question 12 in the guidelines and Morgan Stanley’s aggressive positioning. Then there’s Merrill Lynch in the forefront with new advertising supporting the rule saying that they are the “first among their peers” to take the position that “this is a positive step forward for the industry” along with their commitment to the “best interest of the client.” This is what advisers will need to start telling their clients.
This strategy would be on par with what Laura Virili, a marketing strategist for the financial services industry, might suggest. She states, “Most clients more than likely don’t know what the DoL ruling is so it’s best to communicate often.” In this age of technology, Virili recommends a social media strategy, but warns that “some clients may miss the message, so use all channels: phone, mail, email and social.” Although much action is being taken by firms as a proactive response to the rules, crafting a PR message that makes sense is important for clients and advisers alike.
Several other firms say they are working marketing materials but as far as a PR campaign, they are not yet there, the issue is still in discussion.
Firms have no choice but to take a positive stance on the new rules because despite challenges, it’s execution in April is still a strong possibility. One firm declined to speak on the record, but told me that right now there were “too many moving parts to have a public dialogue.” Another was unable to give an official response, but said that the discussions surrounding the rule were intense and they were waiting to see where “the water settles so not to put anyone at a disadvantage.”
The rule presents a major change for the industry and it’s going to take a while to have a full understanding of the implications beyond the guidelines. Firms are doing their best to be both strategic and prudent with their decisions. The PR issue is merely one component, albeit, an important one to reduce confusion as well as attrition. In the next few months, we should see similar versions of Merrill's message start rolling out.
A federal judge categorically rejects claims by an insurance group that the agency overreached. The ruling "sets the tone" for other suits nationwide, an investor advocate says.November 5
"There are ways to potentially be cute with it. You could potentially cut out retirement business from the back-end bonuses," says an ex-Merrill Lynch executive who works in the independent space. "Cute doesn't usually work when it comes to regulators."November 2
Unlike its rival, Morgan will keep commission-based retirement accounts under the new regulation's best interest contract exemption.October 26