Andrea McGrew could use some rest.

The chief compliance officer for USA Financial, an Ada,Michigan-based broker-dealer and registered advisory supportingabout 150 investment professionals across the country, says she’shad her share of restless nights overseeing the firm’s effort tocomply with the Labor Department’s fiduciary rule.

“It’s been a massive overhaul,” McGrew told BenefitsPRO. “Therule has created significant disruptions in for our advisorchannel.”

If that sounds like more fiduciary-rule-opposition boilerplate,consider this: McGrew describes herself as a proponent of the rule,albeit a “cautious” one.

“Our stance isn’t that controversial,” says McGrew. “We’re notsaying ‘this rule is terrible, get rid of it.’ We are happy tocomply with the rule—we just need the Labor Department to let usknow what it is.”

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Most of USA Financial’s reps feel the same way, shesaid—particularly those that have been fiduciaries all along.McGrew says about 70 percent of the professionals in the USAFinancial channel were registered fiduciaries before the rule’simpartial conduct standards were implemented in June.

All told, the firm’s advisory and broker channels have about$262 million in assets under management, most in discretionaryaccounts, according to the firm’s Form ADV filing with theSecurities and Exchange Commission.

That amount of cash makes USA Financial large in the eyes of theSEC, but relatively small compared to the behemoths. By comparison,LPL, the country’s largest independent broker-dealer, has about$480 billion in AUM.

USA Financial is pushing forward—and spending money—inpreparation for the January 1, 2018 scheduled full compliance datefor the rule.

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Stakeholders across industry are asking the Labor Department todelay that date. In comment letters, they arguethat the strong signals the agency has sent regarding revisions tothe rule justify the delay.

In its comment letter to Labor, TD Ameritrade said it would be“wasteful” to implement compliance procedures for a rule that islikely to change.

That firm, which provides custodial services for more than 5,000independent RIAs, not only wants the rule delayed, but wants aheads up from Labor soon—which is to say now.

That argument aligns with McGrew’s frustration.

“I liken this whole thing to a tennis match—a constant back andforth. It seems like everyday you hear something new that adds tothe uncertainty—an RFI, or testimony from the SEC,” saidMcGrew.

All the while the firm continues to invest in new technology,talent, and legal consultations to assure it’s on a secure path.“So what do we do—invest millions into something that we ultimatelyhave to scratch?”

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A delay would be subject to a legal challenge?

Consumer advocates who want the rule implemented as writtenargue that industry has had plenty of time to achievecompliance.

Not only was industry afforded considerable input by the LaborDepartment over the six years it took to finalize a rule, butObama-era regulators were in fact generous in pushing fullcompliance out to 2018, proponents of the rule argue.

Delaying the January 1 implementation date will cost investorsmillions in conflicted advice, and may not even be lawful,according to one proponent of the rule.

Better Markets, a non-partisan think tank that advocates fortransparency in financial markets, said a delay of the rule wouldbe “arbitrary and capricious,” and subject to a legal challenge,according to the group’s comment letter.

USA Financial’s McGrew thinks the perspective that industry hashad enough time to comply betrays a lack of appreciation for therule’s complexity.

“Proponents that say we’ve had enough time may not have a lot ofexperience on the operational side of the business,” saidMcGrew.

“Putting clients’ interest first will always be our number onepriority,” she added. “But this is a broad rule with a lot of ratholes. For most of our advisors, a best interest standard isnothing new. They embrace that, and they want a leveled playingfield.”

But the challenge—and source of frustration—for advisors is thenew complexity of proving they are giving best interest advice,something McGrew says the advisers in the USA Financial channelhave been doing all along.

“We’re trying to make this as palatable as possible,” she added.“But it has been an evolving process. You can’t have simplecompliance mechanisms for such a complex rule.”

McGrew noted the nascent development of clean share mutualfunds, which strip 12b-1 fees in order to create level fees amonginvestment offerings, as just one of the many operational snafusthe rule has created.

The Capital Group, owner of American Funds, is one of a fewfirms that has filed clean shares with the SEC. In its commentletter to Labor, the firm says industry will need up to two yearsto reorganize distribution channels to accommodate cleanshares.

“Now we need a solution to this problem that no one realized wasa problem when this rule came into effect,” said McGrew on theprospect of clean shares’ role in complying with the rule.

$1 million and counting

So far, McGrew says USA Financial has spent over $1 million incomplying with the rule.

Under the Labor Department’s cost analysis of the rule, mediumsize broker-dealers, with assets between $50 million and $1billion, were expected to incur between $1.2 million and $1.7million in start-up compliance costs.

USA Financial has not pulled investments from its platforms. Thefirm also distributes annuities through its independent marketingorganization arm.

“We don’t think that the essence of the rule is to punish aclient,” said McGrew. “And we don’t see any particular product lineas evil. Under the right circumstance, with the right client,provided there is the right oversight, all products can be theright investment.”

She said she’s concerned that reports of other broker-dealersculling products from platforms could limit investor choice.

“I worry about knee-jerk reactions of pulling product lines,though I get why firms are doing it,” said McGrew. “But to us thatfelt detrimental to both our reps and our clients. Until we knowwhat the final rule looks like, we want our advisors to have accessto all options.”

The company has been overseeing the suitability ofrecommendations on annuities for 13 years through its IMOarm—McGrew doesn’t fear major upheaval to those products under thefiduciary rule, because she thinks they’ve been recommendedappropriately all along.

But the advisors in USA Financial’s channel do have differentbusiness models, and that has presented a challenge. In some cases,advisors have arrangements with life insurance underwriters outsideof USA’s IMO channel.

Instead of prohibiting those sales, McGrew says they will besold under PTE 84-24. Liability will be shared with the advisor andthe insurance company—not with USA Financial.

McGrew says she draws some peace of mind from the fact that muchof what the firm has implemented will stay in place, no matter whatbecomes of the rule.

“We’re using this as a spring board to better our advisors’practices—that’s our mindset,” she said.

Still, all of the uncertainty around the fiduciary rule isunnerving for McGrew, who as a compliance chief is risk averse bynature.

“It feels like the wild west out there,” added McGrew.