RayJay CEO: DOL Fiduciary Battle Is Over
After countless hours of lobbying, one big opponent of the Department of Labor’s plan to rein in brokers’ profit from retirement accounts has thrown in the towel.
Paul Reilly, chief executive of Raymond James Financial, said Thursday that there are no more political strings to be pulled before a final fiduciary rule requiring brokers to put clients’ interests ahead of their own is unveiled.
“I think that rule is going to pass in the way it’s written no matter what we do from a political standpoint,” Reilly told analyst after Raymond James reported an 18% drop in fourth-quarter earnings. “I think Congress will be focused on other bigger fish to fry.”
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The Florida-based company has been a key contributor to the securities industry’s effort to modify the Labor Department rule, which was first proposed in 2010. Among other things, the rule, as re-proposed last year, would require brokers to have clients sign contracts to exempt brokers from fiduciary responsibility and allow clients to bring now-impermissible class-action lawsuits.
Raymond James and other opponents have said that even if such contracts were workable, most clients would have to open fee-based accounts rather than commission accounts. Since many lower- and middle-income Americans would not be able to afford minimum deposits into such accounts, they would be deprived of advice on their retirement savings, fiduciary rule opponents have said.
Politico reported earlier this week that the rule was moving closer to final proposal. The DOL is “racing to meet a Jan. 31 deadline” to send the final version of the rule to the White House Office of Management and Budget, the publication wrote.