MAM 184: Tim & Tom Talk DOL Fiduciary Rule Transcript

Tom:    Welcome to the Mullooly Asset Management podcast. This is Tom Mullooly, and I’m joined by Tim Mullooly.

Tim:     Hey everybody.

Tom:    This is episode 184.

Tim:     184.

Tom:    I almost said 185.

Tim:     Yeah.

Tom:    We’re going to talk about a topic that we covered a few episodes back in December, but apparently …

Tim:     It’s back.

Tom:    It’s back. We need to revisit the Department of Labor changes that are coming now on June 9th.

Tim:     That’s right. Yeah. Does everyone remember that DOL rule that people were talking about a lot last year? Well, like Tom said, it’s coming back, June 9th, so next week, it’ll go into partial effect, not full effect.

It was scheduled originally to go into this partial effect back in March or April, I think, but it got delayed, but it’s finally going into somewhat of effect, so we figured we would give everybody a refresher as to what this rule is, who it affects, and the ins and outs.

Tom:    A couple of things that, I think, are important. Tim’s right in the sense that this was originally supposed to be in place April 10th and with the full effect of January 1st of next year, 2018, and that full implementation date …

Tim:     That’s still the case. That’s still set. Yup.

Tom:    Yeah. The major change … I sat on a panel at NASDAQ at the end of November discussing the Department of Labor changes. At that time, we didn’t know it was going to get pushed back like it has, but I remember speaking with a reporter afterwards and I said, “For one of the few times in my career, I can remember being the after picture, not the before picture,” because it sounds like, on the surface, that they would prefer to see advisors gravitate more towards the business model that we’ve got here at Mullooly Asset Management.

Tim:     Right. Yeah. For us here, as a firm, not going to have too many big changes to put into effect with this rule. It’s more going to affect people in the broker/dealer side of things, but it’s just going into partial effect on June 9th, so what exactly does that mean?

Tom:    June 9th happens to be a Friday, so I think everyone’s going to be good over the weekend.

Tim:     Right.

Tom:    They’re not going to really enforce any of the rules on the very first day that this is in place, and it’s kind of … What was the analogy that you saw in a magazine?

Tim:     I think one article in Forbes said there is a “no bite” during this partial effect period, meaning, the rules are there and they want you to abide by them, but there’s not going to be any real enforcement of them until the January 1st full effect.

Tom:    They’re kind of making a trial run.

Tim:     Right. Just a dry run to … You could call it a “soft open”, when you open a restaurant, I think, was the quote from the Forbes article. Even though you know you have to act in the best interest of your investors, there’s no one really enforcing it.

Tom:    It’s pretty amazing to think that between basically now and January 1st, we’re going to force people in the industry to act in the best interest of investors. Are you kidding me?

Tim:     Shouldn’t that have always been the case?

Tom:    Right. I just want to read some things that were in the Department of Labor frequently asked questions. If you want to read the entire rules that they put out, go right ahead, but they put out a couple of these frequently asked question guides and they’re excellent.

Tim:     They’re much easier to read for everyday people.

Tom:    What they talked about was during this transition period,