Don’t confuse fee-based RIAs with fee-only RIAs ifyou want to talk fiduciary regulations with Harold Evensky andexpect to get away with it.

Evensky, Chair of Evensky, Katz and Foldes Financial, a fee-onlywealth management firm with about $1.5 billion in assets undermanagement, is credited with being one of the first to pioneer thefee-only advisory movement in the early 1990s, when his practicemade the jump from a commission-based model of compensation to afee-based, fiduciary model.

Now in his 70s, he continues to lead the firm he co-founded andserves as an adjunct professor at Texas Tech University, where heteaches a graduate course in wealth management.

He is as faithful to the fee-only model as he has ever been andis an outspoken advocate of the Department of Labor andits proposed fiduciary rule.

The primary objection to the rule from its opponents—that itwould move the brokerage industry to a fee-only compensation modeland therefore price low and middle-market retirement saversout of the financial services market—is “unbelievablynonsensical” to Evensky.

“None of those objections hold much substance,” he said. “Thebrokerage and insurance industries say they want a fiduciarystandard, but they are attempting to redefine what a fiduciaryis.”

Which is unnecessary at best, and disingenuous at worst, inEvensky’s mind.

“The concept of a fiduciary is simple and it is well-establishedin the law. It boils down to managing the best interests of yourclients. We don’t need a new ‘uniform fiduciary standard’ as thebrokerage industry calls. We need to enforce what already exists,”he said.

And that’s what the DOL’s rule does, he thinks.

Those who say the consequence of the rule will be anindustry-wide shift to fee-only models think differently, ofcourse.

Secular analysis from ratings agencies has said the DOL rule, asproposed, could significantly impact existing distribution channelsfor annuities, products sold on commission by insurance agents andbroker-dealers.

Non-secular advocates of the insurance products clearly findthat prospect troubling.

In 2014, $80 billion worth of fixed-annuity products were sold,about half through IRA accounts, according to data from LIMRA,cited by Kim O’Brien, CEO of Americans for Annuity Protection, inan interview with BenefitsPro.com.

Presuming a best interest standard advanced by the DOL would force commission models to extinction, 401(k) assets’access to annuitized products could be severely restricted, fearsO’Brien and other annuity advocates.

To a growing number of academics and regulators who seeannuities as a vital hedge to longevity risk in retirement, thatpotential outcome would not be in retirement investors’ bestinterest.

Evensky can be counted as part of an emerging chorus that seesimmediate and deferred annuities as not only useful, but necessarytools to retirement strategy going forward.

He did not always think so. As a fee-only fiduciary, Evenskyonce was as outspokenly critical of annuities as he is now aproponent of them.

“In the next ten years, annuities are going to emerge as vitallyimportant vehicles for retirement planning,” predicts Evensky.

Even today, amid historically low interest rates, Evensky sees aplace for annuities in some of his clients’ portfolios. But heexpects to be recommending annuities to the majority of his clientsin the foreseeable future, even for the wealthiest, who can useannuity strategies to replace existing low-yielding conservativeallocations to hedge against longevity and out-of-pocket medicaland long-term care costs.

And as interest rates rise, making annuity payments morevaluable, their value as a tool to turn assets into retirementincome will only compound, he says.

That’s going to test the fiduciary purity of fee-only RIAs, whoEvensky says will have a fiduciary obligation to move portions ofsavings into annuities, even though they will not get paid fordoing so, because they cannot accept commission compensation.

On the occasions when Evensky recommends annuitizing portions ofsavings, that’s business he walks right out the door.

“It’s black and white for us. We give that business away becausewe don’t get paid on the assets that we recommend to an annuity.That is the reality of being a fiduciary. If the annuity option isin that client’s best interest, I have no choice but to put them init. Even if it means I lose money,” he explained.

He is so convinced of immediate annuities’ utility, evenfiduciary necessity, going forward, that he sees an emergingconflict of interest for fee-only RIAs on the horizon.

“It’s going to be an interesting issue,” he said. “Immediateannuities are going to become an important part of financialplanning. Fiduciaries are going to have to recommend products theycan’t get paid on if they are to do what’s in their clients’ bestinterests. It’s just that simple.”

Evensky questions the reasoning that says DOL’s rule willrestrict access to annuities. He is, however, confident the rule,as proposed, will change business models.

“That’s fine. The fiduciary standard isn’t written to protectbusiness models, it’s written to protect investors,” he said.

One recent blog post from a financial planner and consultant toadvisory firms suggests some fee-only RIAs have found a way tocircumvent commission restrictions on annuity recommendations.

In June, CNBC released its top 100 list of fee-only RIAfirms.

On his blog, “Nerd’s Eye View,” Michael Kitces took the time tolook at the top 10 firms’ Form ADV Part 2 disclosures.

He found “nine of 10 of them share in insurance commissions, ownan insurance agency, or are under common ownership alongside aninsurance affiliate to which advisory clients are referred,” hewrote.

Kitces was not available to comment on his findings before goingto press.

Evensky was.

“Truth? In advertising?” wrote Evensky in an email afterreviewing Kitces findings, questioning the integrity of advisorsthat claim they are fee-only when they are not.

For a purist like Evensky, there’s just no room for commissionsin the pocket of a true fiduciary.