ORLANDO, FLA. Ahead of a pending fiduciary rule from the Department of Labor, Raymond James Financial CEO Paul Reilly has a simple request: Can't we just get along?
"It's a lot better when there's cooperation," he says.
But, Reilly adds, "I don't know if that is possible in this political environment."
Reilly says he supports the thrust of what the Labor Department is trying to do -- help protect client's retirement. But the executive questions their method, saying that the proposed rule would be cumbersome to implement and will likely cause firms to shy away from serving many small accounts.
"We're always a firm that speaks up for what we think is right. The concept of a fiduciary standard, doing what's right for clients, is something we agree with. But the DoL proposal doesn't achieve that. And it brings significant costs to clients," Reilly says.
If it goes into effect, the proposed rule would affect advisors or brokers providing retirement advice to retirement plan sponsors, plan participants or IRA owners.
Reilly also says that he thought some of the rhetoric coming from the White House when the DoL proposal was announced was unfair in its criticism of financial advisors and painted them all with a single brush. Additionally, he says that commissions are too often misrepresented as always bad for clients in comparison to fee-based business; reality is much more complex.
Reilly says that the firm will be sending the Labor Department a comment letter on the proposed rule. He hopes that regulators will give consideration to the industry's concerns.
Reilly, who spoke here with his firm's employee advisors in a special closed-door session, says advisors are concerned about the proposed rules effects, and ask him about it frequently.
"It's in every question and answer. I give them overall impacts, but until there is a law, I can't give them final guidance," Reilly says, adding that for many people, retirement accounts represent a large portion of their net worth outside of their house.
Should the proposed rule go into effect, Raymond James will be able to comply with the new regulations, he says.
"But the problem will be that we will not serve certain accounts or refuse to give certain choices because of the legal and compliance issues will be so cumbersome," he says.
Noting that relations between regulators and the industry have soured somewhat since the financial crisis, Reilly says he wishes the two sides could collaborate more closely on this issue.
"We haven't had a meaningful dialog on what works," he says.