The Fiduciary Rule: A Push for Client-First Advice

I’ve written about the fiduciary rule so often I’ve lost track. (If you’re curious, search “fiduciary rule” on our site.) But here’s the short version:

A few years ago, regulators began pushing for a uniform fiduciary standard—one that would require advisors to act in the best interests of their clients. This was a shift away from the old “suitability” standard, which allowed brokers to recommend products that were simply considered “suitable,” even if they came with higher fees or commissions.

The Department of Labor wanted to eliminate that loophole. Under the fiduciary rule, if two funds are similar but one has lower expenses, the advisor must recommend the cheaper option. The problem? Many brokerage firms benefit financially from recommending higher-cost products—through revenue sharing, bonuses, trips, and even tying product sales to employee healthcare eligibility. The industry fought back, and after significant revisions, the final rule lost much of its impact. Still, the conversation had started, and change was (slowly) underway.

Fee-Based Advice and a Changing Business Model

Despite their resistance, many brokerage firms started adopting aspects of the fiduciary rule—even though it hasn’t officially taken effect and may never. Why? Money.

Fee-based advice, like what we provide at Gainplan, is designed to be conflict-free. We don’t accept revenue sharing from fund companies, and our clients sign a contract that states we act in their best interest. But under the new fiduciary rule, firms can still enter into these so-called “best interest contracts” while keeping exemptions that allow them to maintain certain conflicts of interest.

According to Morningstar, fee-based accounts can bring in up to 50% more revenue than commission-based ones. Brokerage firms are now encouraging clients to shift to fee-based managed accounts, while still earning money from fund companies—just in a less direct way. They no longer need to sell the funds themselves; they simply need to include them in their portfolios. It’s no surprise that firms like Merrill have reported increased revenues, even as traditional commissions decline.

The irony? One of the main criticisms of the fiduciary rule was that it would make retirement advice more expensive. That may be true—but has the quality of advice improved? As long as conflicts of interest remain embedded in the system, it’s hard to argue that it has.

A Lighter Look: Celebrities, Maroon 5, and Larry Fink

After diving into all this talk about fees and fiduciary duties, let’s lighten things up with a look at celebrity money advice—always good for a laugh.

Take Priyanka Chopra, for example. (I had to look her up too.) Her financial approach?

“I divide it between what I want to save, investments, what I want to spend, and philanthropy.”
Not bad! Though technically, she may have counted “saving” twice.

Then there’s Lars Ulrich of Metallica fame:

“We have two employees who take care of stretching us, massaging us. We have a chef. We stay in comfortable hotels. There’s private plane travel.”
Hey, whatever works.

And finally, Larry Fink—CEO of BlackRock—recently shared in a Bloomberg interview that his company was behind the early days of Maroon 5. Who knew?

“The first artist we signed was Kara’s Flowers… changed their name to Maroon 5… made a lot of money, in a depression!”
Oh, and he had some solid thoughts on ETFs too.
“They’re not just for beta exposure. Active managers use them for efficient asset allocation.”

Same here, Larry. We get it. We may not use many BlackRock ETFs, but you’re speaking our language.

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