Quinn Curtis

The Fiduciary Rule Controversy and the Future of Investment Advice

One of the signature rulemaking initiatives of the Obama administration was the Fiduciary Rule, which redefined the relationship between retirement investors and their brokers by imposing broad fiduciary obligations on financial professionals who had previously escaped classification as fiduciaries. The Rule is enormously controversial, and its future remains clouded. This paper offers an assessment of the Rule in light of the academic literature. It argues that, while the Fiduciary Rule is a well-intentioned and plausible means to confront the well-documented problem of conflicted investment advice, it promises only modest benefits when all relevant costs are considered and even these benefits are jeopardized by the risk of rising costs related to compliance and liability. A reform agenda aimed at reducing the demand for costly professional advice is likely to deliver greater returns than regulating how that advice is delivered.