“You can't win, Darth. If you strike me down, I shall become more powerful than you can possibly imagine.”

Could it be that the DOL's now-vacated fiduciary rule is the Obi-Wan Kenobi of the great battle for the fiduciary standard? And, if so, who earns the role of Darth Vader?

One thing is clear, like Obi-Wan Kenobi and any innumerable zombie from the vast swath of “Undead” movies, the fiduciary rule continues to reappear when most needed (see “DOL Fiduciary Rule Post-Mortem: How Long Will the Taste Linger?” FiduciaryNews.com, August 28, 2018).

This, in part, has happened because the DOL, through its Field Assistance Bulletin, has allowed the ghost of the rule to haunt those willing to be haunted.

It goes beyond these technical regulatory mechanics. Something has kept the spirit of the fiduciary rule alive. It's not the DOL. It's not the SEC's attempt to redefine “best interest.” It's not even the valiant and pervasive (and often persuasive) efforts of fiduciary advocates. It's something much more powerful, much more enduring, and, in the end, much more unstoppable.

It's the market.

Not “Mr. Market” of Ben Graham lore, but the marketplace – the active battleground where financial service providers regularly engage to win the hearts, minds, and a piece of the assets of every retail and institutional investor.

This battleground bows to no arbitrary regulatory god. Its rules are the rules of the proverbial playground. They may fluctuate, but once they achieve critical mass, their roots go deep.

So, yes, the law of the DOL's fiduciary rule has formally ended. But its spirit lives on. And that spirit may never be defeated.

Unless…

To understand the caveat here, one must understand how grief is ultimately conquered.

We've all encountered grief. When first experienced, it's all-consuming. We feel as though it will never end, never go away. The shock and blunt reality of its cause remains with us. It not only loiters within us, it weighs us down. We feel as if we shall grieve for the remainder of eternity.

Then something happens. We get busy. Those immediate memories of the source of that grief get pushed back by a new batch of memories. If we're lucky, that new batch is closely related to the memories that caused the grief. This has the effect of “getting right back on the bicycle.” Sooner or later, the pure volume of new memories creates a great distance between us and the memory for which we once grieved. That distance – not just in time but in the simple quantity of newer memories – shrinks the cause of that grief. Eventually, that cause diminishes to the point where grief no longer burdens us. That's when we can finally move on.

How does this relate to where we're at right now with the fiduciary rule? The imprint of that rule lingers on. It will continue to linger unless and until it is replaced. Not by memories, but by new rules, new procedures, new regulations.

The current candidate most likely to fulfill this purpose is the SEC's Best Interest Proposal. It alone probably isn't enough to push the memory of the DOL's fiduciary rule beyond the cusp of oblivion in the eyes of the market, but it will nudge it closer to that edge.

What forces might counter that nudge? They're out there — I just won't spoil the end of the movie by revealing them.

“Use the Force, Luke…”

Instant Insights /

Fiduciary rule worth more dead than alive – Carosa

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