BizVoice September/October 2017

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50 BizVoice/Indiana Chamber – September/October 2017
Born For
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BUSINESS BANKING | COMMERCIAL LENDING
RESOURCES: Mark Chamberlain, Lakeside Wealth Management, at | Craig Dwight, Horizon Bank, at |
J. Albert Smith, Chase Bank, at
But the Department of Labor is unwittingly going to take the viability
of financial advice out of middle class America.”
Lakeside Wealth Management started in 2002 and has $1.2 billion
in assets with 18 licensed advisors, a 401(k) and qualified plan
business, and a private wealth business.
The company’s advisors must already act as fiduciaries since the
company moved to a fee-based model (instead of commission-based
model) several years ago. Chamberlain says that while the rule won’t
initially change the way his company operates, he’d be “naïve” to say
there will be no impact.
“It’s a way smaller bump in the road for me than the guy down
the street in the commission world,” he suggests.
The uncertainty of further potential changes at the federal level is
frustrating, Chamberlain says. And he’s not sure the rule is even enforceable.
“The DOL is doing a great job of being non-committal. It’s
guidance you could drive a Mack truck through,” he says. “(The DOL)
doesn’t have the budget or the manpower to enforce the rule.”
“It’s going to take a number of court cases to come through and
some judge is going to rule. Then the regulators will come back based
on tort law or judgements and will massage the way the rule looks
around court decisions. It’s a scary place for us to be as advisors.”
Moving forward
How can advisors operate in a state of uncertainty?
“We took the approach awhile back: We know the rule is
coming; it’s fuzzy about what it means,” Chamberlain recalls. “We
could spend all the time and effort running away from it, but let’s run
into it and embrace it as much as we can. If we do get called on the
carpet for something, we can sell a body of work and confidence that
we tried to do the right thing in good faith.”
Another regulation causing heartburn is an IRS rule about fee
transparency and disclosure. Chamberlain notes that was the largest
industry concern prior to the fiduciary rule.
The rule makes it mandatory for advisors to “clearly explain who
is getting paid and how much.”
The positive consequences of that rule, however, were that those
who were unable or unwilling to disclose that information got out of
the business. That self-policing is a spot of hope for Chamberlain, in
terms of the fiduciary rule and other regulations.
“It’s unpopular in the advisor world, but my opinion is that with
all the potential unintended consequences, I think it’s going to further
clean out our backyard. I hope (the cleaning) comes from the industry
and not the regulators. We need to be more proactive about stuff like
this,” he adds.
As in banking, expect smaller operations to go by the wayside in
investments because of the regulatory environment, Chamberlain
notes. He also calls for a more practical team approach to regulations.
“If we just were able to sit down more and perhaps with the
regulator at the table (instead of), ‘Here’s a rule and we want you to
follow it.’ That would be a more adult way to approach the problem
than by just adding more rules. It feels like parenting right now and I’d
rather it be a brother- or sisterhood,” he contends.