In this two-part series, we ask independent financial advisors how they view the Department of Labor’s fiduciary rule, with a view to its potential demise. In this first installment, we hear from FAs who wouldn’t be devastated to see the rule slip away. Tomorrow: Pro-DOL Rule indie FAs argue why Trump should stick with the rule.

President-elect Donald Trump’s victory seems to have put in doubt the Department of Labour’s new rule on retirement accounts.

Trump may have other priorities than this DOL fiduciary rule, which requires financial advisors of all stripes to put their customers’ interests before their own when dealing with retirement accounts such as 401(k)s and IRAs. But the incoming Chief Magistrate ran on a promise to reduce federal government regulations. And at least one influential member of his transition team — Anthony Scaramucci, co-chief of hedge-fund manager SkyBridge Capital — seems eager to see it disappear.

At this stage, industry consensus — echoed in most of FA-IQ’s conversations with independent FAs — has the rule pegged for doom.

For instance, New York-based indie advisor Allan Katz, owner of an RIA called Comprehensive Wealth Management Group that offers securities through Royal Alliance Associates, says the DOL rule may come in for earlier attention from Trump’s reg busters than some think “because it hasn’t even taken effect yet and much of the industry is against it.”

That part of the industry opposed to the rule may be getting a boost soon from the courts. After a couple of legal rebuffs, a group of plaintiffs that includes the Securities Industry and Financial Markets Association and the U.S. Chamber of Commerce is now before a judge who seems to share its concern about perceived overreach by the DOL, at least for one judicial watcher.

For Katz, though, the rule’s advent and timing “doesn’t make much difference” because “as a CFP” — that is, one who holds the Certified Financial Planner designation — “I have always conducted myself as a fiduciary and only recommend what I truly feel is best for each client.”

That said, if the rule triggers an exodus of “less qualified advisors,” Katz, who charges clients on a project basis, reckons it would be “good for business.”

Bigger picture, Katz says the kind of ethical behavior the DOL rule seeks to encourage in FAs “really isn’t something that can be legislated.”

University of South Florida professor Laura Mattia seems to agree.

“It is assumed that financial planners, as professionals, have a social contract with society, governed by a code of ethics and a commitment to competence, integrity and morality,” says Mattia, a CFP who last year sold a $200 million in assets fee-only practice to concentrate on teaching a new generation of planners. “I believe the Department of Labor attached these attributes to all financial advisors when establishing the new fiduciary rule.

Mattia says there are FAs of all types who instinctively try to act in their clients’ best interests. But there are others “who have a different motivation or don’t even know what they don’t know.”

Laura Mattia

In this light, Mattia says the DOL rule erroneously “assumes that removing conflicts of interest and creating regulation will ensure an advisor will act in the client’s best interest.”

But, asks Mattia, how can advisors truly put clients first “if they don’t have the human capital required to know what is in the client’s best interest?”

Michael Palazzolo, head of the Birmingham, Mich.-based RIA Fintentional, says that as a fiduciary he’s personally “indifferent to the potential demise of the DOL rule.”

But that’s not because he thinks it goes too far.

“It only covers retirement accounts,” says Palazzolo. “Does this mean one can act as a fiduciary for retirement accounts but not for money invested outside of retirement accounts?”

Palazzolo thinks this uncertainty “could cause even more confusion for people” despite the rule’s undoubted “good intentions” toward the consumer.

Robert Schmansky runs Clear Financial Advisors in nearby Livonia, Mich., an RIA that charges some clients on about $25 million under management and others on hourly or project bases. He says those who cheer the rule are “ignoring the costs to firms and clients alike.”

Adds Schmansky: “The rule has been a killer to new businesses and innovation” because firms have had to put so much energy into compliance.

Meanwhile, given uncertainty about its fate under a Trump administration, Schmansky says he’s “holding off on plans to raise fees and minimums to see what happens.”