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President Trump issued orders to roll-back Dodd-Frank and to review the Fiduciary Rule. It’s caused a stir, okay a tempest. Like everything Trump, the response was “yuge.”

How does a widely agreed upon principle like fiduciary end up becoming an-only-in-Washington s*#@storm?

Easy, Congress wrote laws to clarify the matter. There has been a perfectly acceptable Fiduciary Rule on the books since the 1940 Investment Advisors Act. It’s non-controversial, serviceable, and has stood the test of time.

The reason Congress decided to address the issue again was simply that the rule did not apply to Brokers, it only applied to Registered Investment Advisers. And Congress chose to refine and redefine the rules for fiduciary investment advice through the Department of Labor, because of the importance of investments to retirement accounts.

In their wisdom, Congress couldn’t simply state that the 1940 Act applied to brokers as well. No, Congress had to define fiduciary all over again, with pages and pages of rules and regulations which were incomprehensible from the get-go. In other words, they took fiduciary, a concept with almost universal public support and certain practical merits, and they turned it on its head and created a mountain of rules and regulation that brought the entire concept of “fiduciary” into question.

We require professionals in many fields to put their clients well-being before their own. No one would sanction a heart surgeon performing a few “extra” surgeries in order to buy a new yacht. CPAs, attorneys, pharmacists, all willingly accept the burden of putting their clients’ interests first and foremost. It’s not a controversial idea.

Fiduciary itself is not the problem. If Dodd-Frank is unworkable, Congress should take a bold step and work with the Investment Advisor’s definition and rules, after all it’s done the job since 1940.

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