Over the last few years, the independent broker dealer industry in USA has seen a lot of churn. Many large broker dealers grew their book of business and registered representative base inorganically, by taking over their smaller counterparts. What came as legacy was a host of disparate systems and operational teams, all doing similar tasks.
The broker dealers were still grappling with the problem of integrating the systems of their new found entities, when the Department of Labor (DOL) threw them another curveball in April 2015. This curveball has since come to be called as DOL fiduciary rule and threatens to alter the entire dynamics of the industry, which has operated on a variable compensation model for decades. It will force the industry, which has long regarded its role as transaction facilitators, to wear the hat of the advisors and discharge all the onerous responsibilities that come with it. But what exactly is the DOL fiduciary rule and what will be its impact? This white paper is an attempt to demystify the ruling and aims to propose what broker dealers should be doing to prepare for this seismic event.
