The DOL Fiduciary Rule Wouldn't Help Johnny Depp

Has Johnny Depp really become the poster child for advocates of the Department of Labor’s fiduciary rule? As ridiculous as that may seem, several news outlets, including the New York Times and Yahoo! Finance, have published columns relating the Edward Scissorhands actor’s financial woes as a cautionary tale promoting regulatory intervention.
 
The reasoning in these columns is pretty thin, and we won’t try to relate it here. It challenges the limits of one’s imagination to make a connection between the financial problems of a multimillionaire actor and a federal regulation that could harm millions of regular people trying prepare for retirement. Suffice it to say that the Department of Labor’s fiduciary rule would have no bearing on Johnny Depp’s dispute with his business management company.
 
The DOL rule would do nothing to prevent the type of deliberate fraud or mismanagement Mr. Depp alleges in his lawsuit against the company. It would do nothing to prevent the type of “irresponsible and profligate spending” the firm alleges in its countersuit. Had the DOL rule been in effect, Mr. Depp would find himself in the same situation as now.
 
Despite advocates who routinely reduce the regulation filling hundreds of pages in the Federal Register to the simple sound bite that “advisors must work in the best interest of their clients,” the rule is exceedingly complex. It has already proven costly and burdensome for companies and advisors working towards compliance.
 
Existing laws protect investors from fraud. Financial advisors are already heavily regulated. What the DOL rule would do is place additional restrictive and costly regulations on financial advisors who serve middle-market investors saving for retirement. The real impact of the rule would be felt not by people like Mr. Depp, but by those with much more modest means who would lose access to affordable financial services and advice.
 
But the New York Times piece referenced above truly misses the mark when columnist Charles Duhigg writes:  “At the core of those who oppose the new fiduciary rules is a basic belief: People ought to bear more responsibility for monitoring their finances and lives.”
 
In fact, the opposite is true. Opposition to the DOL rule is firmly rooted in concerns that it will deny middle income investors access to badly needed services from professional advisors, forcing them to shoulder the responsibility for complicated financial decisions with no personal guidance.
Photo by Angela George, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=14795112
  • Posted February 2, 2017 IN


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