Don Trone isn’t happy—and it isn’t a pretty sight. The fiduciary bulldog and CEO of consulting firm 3ethos is a long-time critic of the fiduciary rule as currently written, and the rule’s release in April did little to alleviate his frustration.
“It’s an insult to our intelligence,” Trone says in an interview at the 401(k) Summit in Nashville. “The length indicates that the people who wrote it don’t know what they’re talking about.”
As proof, he offers the following 50 word statement, which he says effectively sums up the 1,000-plus page rule:
A fiduciary cannot parley their position of trust for personal profit. As such, the fiduciary has a duty to notify the client of every party that has been compensated by the client’s account; and, to demonstrate that the compensation is fair and reasonable for the level of services being rendered.
“I am concerned by the role the AARP and other consumer groups had in influencing the rule. They were given access that the rest of the public did not receive. There are blue shy rules that say they must disclose their meeting and conversations. I’m not a lawyer, but I think someone should look into whether or not those rules were followed.”
If that weren’t bad enough, Trone is also concerned by some of the industry groups and the role they had in crafting the rule—specifically the CFP Board, his long-time nemesis.
He notes the lawsuits that are sure to come, and argues the rule’s length is in part due to the litigation.
“They were anticipating lawsuits and essentially wrote their brief into the rule.”
After all is said and done, Trone says the rule still does not define fiduciary, which he describes as its “Achilles heel.”
“Fiduciary is the gold standard for us,” Trone laments. “The DOL has defined it as a de minimis standard—the minimum required to be a fiduciary. They have taken away a point of differentiation for true fiduciaries. At the end of the day, it doesn’t protect those who need the most protection. The minimum to make the rule effective is $360,000, that eliminates 98 percent of IRA rollovers.
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