Cannon Financial Institute

A Tsunami and the DOL Fiduciary Rule: How to Survive Both


The ocean surrounding the Indonesian island of Simeulue started to recede to the horizon revealing coral reefs, sunken boats, and the seabed itself. Moments before, one of the most powerful earthquakes ever measured had shaken the island—which was less than twenty-four miles from the epicenter. The force of this earthquake both lifted the island almost five feet and triggered the 2004 Indian Ocean Tsunami— one of the deadliest natural disasters in recorded history.

Ten minutes after the quake subsided, a series of ninety foot waves crashed ashore on Simeulue. How many of the island’s 78,000 people perished? Seven. How? They were prepared. 

 “The new DOL Fiduciary rule will change the retirement industry in the US as much as “talkies” changed Hollywood,” says Cannon Financial Executive Vice President, Bill Trigleth. “While firms have until January 1st 2018 to ‘come into full compliance,’[1] FAs and all other advisors must begin to prepare now.”

Bill has spent thirty-seven years in the financial services industry in brokerage, wealth management, compliance, financial adviser education and strategic consulting to financial services firms. He talks to FAs around the country and spends several hours a day reading industry news. Unfortunately, Bill observes, “under most scenarios, many advisers will experience a drop in fees as the DOL rule takes hold. Advisors and firms will need to find new ways to convey their value and that most likely will include re-crafting their fee structure and move away from Assets Under Management fees as the anchor for all their services and products, to relieve the pressure of margin compression impacting all services.”

Bill says it is important to first understand the impact of the DOL Fiduciary Rule ruling on your practice. He also mentions a good way to prepare your practice for the ruling is to use this Cannon template as a starting point.

The New DOL Fiduciary Rule: How to Prepare from Cannon Financial.

1)    Analyze your book. How many IRAs and IRA rollovers do you have?

2)    Are these accounts “stand alones” or do they belong to larger relationships?

3)    How much money is in each IRA account and how is it invested?

4)    How much fee income does each of account currently produce?

5)    Analyze each account comparing the fee income you would receive under BICE and contrasting that number with fees you would receive from an Advice account under your current fee structure.

6)    You will now have a good estimate of how your practice will be impacted from this new rule and what direction you want to: BICE or advice?

So how did the people of Simeulue survive when tens of thousands of people on neighboring islands did not? In 1907 a powerful tsunami had wrecked the island, killing thousands. Those who survived taught the next generation who passed onto subsequent generations how to foretell a tsunami and what to do. If an earthquake occurred and shortly thereafter the ocean began to recede, gather your family and run to higher ground immediately for you only had minutes before a tsunami hit.

Because they were prepared, they survived. And with preparation, so will you. Yet to both survive and prosper in the coming area, you will need to change your way of doing business. Says Bill, “the best way to carry this out is to use the basic steps we have all learned to deal with change: Plan, Organize, Execute and Manage.” 

To learn more about this topic, register for our Retirement Planning Services Issues & Updates course.

Read More on this topic:

The BICE “Workaround” and the new DOL Fiduciary Rule

Details about the DOL Ruling on the DOL website

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[1] Transcript of Department of Labor press conference of 4.7.16

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