No, “Dog Days of Summer” doesn't refer to the string of blockbuster megaflops Hollywood pumped out this season.

The term actually derives from ancient Rome when, before the precession of the equinoxes gradually changed things, the brightest star in the night sky (“Sirius,” a.k.a. the “Dog Star”) rose about the same time as the sun. This generally occurred from late July to late August during the height of the hot, humid Mediterranean summer. Life slowed down to a standstill.

While the Earth's precession has shifted Sirius' rise with the sun by about a month, the effect of “Dog Days” remains today. In fact, Italy still honors the Roman tradition of taking the month of August off. Business (except for that related to tourism) winds down to a standstill. Even our own government leaves the capital during the hottest months of summer. Legislation, regulatory development and the usual shenanigans virtually stop, leaving political reporters with their thumbs twiddling.

And so, we're left with the dog days of fiduciary. It's a time when the SEC has wrapped up its public comment period on the uniform fiduciary standard and the DOL continues to defer its decision on the fiduciary rule. We'll spend the next several weeks with nothing more than idle speculation by those few journalists who have used up all their vacation time. No doubt they'll refer to the mountains of published “data” on the business impact of acting in a fiduciary capacity.

I say “data” because there's very little empirical support for the numerical claims pouring out of the ink of the industry's lobbyists printers. These are the same folks who continue to claim adopting a universal standard will increase the “cost” to brokers who want to act like advisers. They conveniently omit, if these costs are in fact true, the fact advisers today must already be paying those costs where brokers providing the same service aren't. Gee, does that sound fair?

On the flip-side, advocates for the universal fiduciary standard have their own set of “data.” Unlike their opponents, at least their numbers are based on real experience, although the statistically significance is still uncertain. These folks show advisers who switched from the non-fiduciary broker-adviser business model to the fiduciary-adviser model actually increased their revenue.

The real, empirically supported data, however, was published years ago (and confirmed in other academic studies as recently as early this year). This data has been available to both the SEC and the DOL since before they began to pursue their various fiduciary endeavors. The fact they ignored it in their first iteration tells you all you need to know about the intellectual honesty of Washington, D.C.

Nothing happened then when we had real data. Expect more nothing as a result of the conflicting faux data.

Perhaps now it's best we take an extended vacation. I hear Italy is a good place to visit this time of year.

Instant Insights /

The dog days of fiduciary

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