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With stories of the Department of Labor Fiduciary rule breaking almost daily over the past three years, the news cycle will finally be shifting its focus to the SEC fiduciary rule as the DOL rule appears expiring. However, the DOL rule was one minor episode of a long transition towards a fiduciary model of financial planning. It was by no means the start of the fiduciary conversation, and the new SEC rule will not mark the end of the discussion. Nevertheless, to serve the needs of our evolving consumers, a more comprehensive fiduciary mindset needs to be adopted in order to survive.

The financial services profession needs to “rewire” its current thinking.

In my recent book, Rewirement: Rewiring the Way You Think About Retirement!, I encouraged both financial advisors and consumers to rethink the way they view retirement planning by urging everyone to take a comprehensive look at planning. While comprehensive planning sounds intuitive, it is in fact much more complicated. While comprehensive planning and fiduciary responsibility are not synonymous, a fiduciary framework requires a broader or “holistic” view of planning. The fiduciary framework evolved from a complicated past in which financial planning grew out of specialized disciplines, such as insurance and investing. As such, those disciplines have struggled to revamp what were successful businesses into the new framework of financial planning.

From the 1920s to 1940s, there were just insurance professionals and stock brokers. The former functioned as the trusted financial advisor and the latter worked only with a small subset of the population. The American College of Financial Services developed the CLU designation for these insurance professionals 90 years ago, to try and build a profession in the industry. The insurance professional was the dominant “financial planner” for decades, and it wasn’t until the 1970s and 1980s – in part due to the changes brought forth by ERISA retirement plans – that the idea of a comprehensive financial advisor, managing assets and developing full financial plans, emerged.

The problem with this emergence was that specializations in the areas of insurance and investment management had already developed. Strong, profitable and respected companies dominated the financial landscape. But, they were not comprehensive. They were specialized financial planning companies. If the industry had developed like attorneys, where generalists were followed by specialists, the notion of broad-based fiduciaries, or standard of care, would have been more easily adopted. Instead, comprehensive planning and a fiduciary framework posed serious challenges to well-established specialty practices.

So far, government attempts to force a broad standard of care have failed. Even the newly proposed SEC standard would be, at most, a very light “fiduciary standard.” So if the government can’t force the model, it begs the question who, if anyone, can?

It will be the market itself.