Raymond James Financial CEO Paul Reilly has made it his personal mission to oppose a fiduciary definition proposed by the Department of Labor, and he wants Raymond James advisors to join him.

In an email sent out at the end of January to Raymond James employees, Reilly called a recent leaked White House memorandum supporting the DOL as "an example of biased and distorted research (that) impugns the integrity of the work our advisors do every day to help clients achieve their financial goals."

The memo, which was first reported by The Hill, states that there was evidence that "the current regulatory environment creates perverse incentives that ultimately cost savers billions of dollars a year." The memo is in support of a proposed fiduciary definition for professionals selling retirement investments to 401(k) beneficiaries under the Employee Retirement Income Security Act.

In his email to Raymond James advisors, Reilly writes that he was working with SIFMA in its lobbying efforts, "and rallying our senior management team and all of our associates to oppose the DOL's proposal."

Though SIFMA believes the DOL proposal "is an overbroad expansion of the fiduciary standard," it does support a uniform fiduciary standard. 

Reilly stressed that the initiative "is not a political response," but added that the firm has "created communications you can use to contact your representatives in Washington, as well as the president."

"I encourage you to take action to stop the DOL from negatively affecting the ability of millions of investors to receive our advisor's professional advice for their retirement savings."

Raymond James representatives say the firm supports SIFMA's efforts to "raise industry and Congressional awareness of the potentially negative impacts" of the DOL's proposed change in the retirement account fiduciary definition. "Our advisors are actively reaching out to their respective representatives to voice their opinions on potential implications for their clients," the firm says.

Raymond James advisors say that while the email has not stirred much action or discussion among colleagues, they were happy to see their chief executive take a stand on the proposal.

"We are certainly not being told to support the effort, that does not fit with the company culture at all," says one Raymond James advisor. "We have a representative form of government, and he's suggesting that if we agree with the point of view to write to our congressman. He certainly has no way of knowing whether we do or not."

The advisor says that he was upset by the language used in the memo because it made generalizations about the industry, particularly charging that churning of retirement accounts was a common practice.

"The memo only tells part of the story," he says. "Certainly there are some truths in there, but painting the whole industry with that broad of a stroke is just insulting."

Supporters of the DOL's efforts scoffed at Reilly's note.

"This is as Orwellian as it gets," says Barbara Roper, director of investor protection with the Consumer Federation of America in Washington, D.C. "They will serve their clients best by defeating a regulation that would require them to do what's best for their clients?"

"If it is not in the best interests of customers, it's not advice, it’s a sales pitch," Roper continues. "That's what they are fighting for here, to portray themselves as advisors while they are being regulated as salespeople."

"It's the same old argument: not being able to charge commissions limits choice and prevents the small investor from receiving financial advice," says Dave O'Brien, principal, O'Brien Financial Planning, Richmond, Va. and chair of NAPFA's public policy committee. "There's not been any research I've seen to support that argument. As for [the DOL's] alleged 'biased and distorted research,' what research are they talking about?

"The fiduciary standard of acting in someone's best interest spans generations and is a timeless principle that has not been -- and should not be -- bad for consumers," says O'Brien. "I work with ERISA and know from experience that working with the fiduciary standard benefits the plan sponsor as well as the employee."

Investor advocates say that advisor criticism of the DOL's efforts is premature.

“The opposition to the Department of Labor's anticipated fiduciary rule proposal has focused on preventing the DOL from even proposing a rule and is trying to assert that it knows what the rule will say," the Washington, D.C.-based Financial Planning Coalition said in a statement.

"While the Financial Planning Coalition takes no view on a rule that has yet to be proposed, we believe that the DOL should be allowed to proceed with its fiduciary rulemaking process, including issuing a draft rule for public comment."

The Raymond James advisor says the debate over the memo clouds the issue of investor advice. The real issue is determining who is responsible to ensure investors receive the best advice, he says.

"Whether it’s the plan sponsor, whoever the advisor is, the government or the investment practice," he explains. "You could make a case for any of those. I don’t know if this is solving the issue on either side."

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