(Reuters) - As Wall Street moves its fight against a new regulation for retirement account advice to the U.S. courts, LPL Financial Holdings Inc (LPLA.O) just wants to go about its business.
The cost of implementing the U.S. Department of Labor’s new rule, which requires financial brokers to act in clients’ best interests when it comes to retirement accounts, is “not terribly significant” to LPL given its business model, says Mark Casady, the company’s chairman and chief executive.
“It’s very manageable. The things that will take away revenue and the things that will add revenue will basically offset each other,” Casady said at the Reuters Global Wealth Management Summit in New York.
Casady’s remarks contrast with the views of the Securities Industry and Financial Markets Association (SIFMA), which represents the largest U.S. brokerages, and other Wall Street-affiliated groups, including the U.S. Chamber Of Commerce. On June 2, the trade associations filed a legal challenge to the Labor Department rule in a U.S. District Court in Texas. Other groups have followed.
But Casady was dismissive about their decision to sue. When asked about it, he said: “Their choice. America’s a great place.”
In April, the Labor Department released a rule for financial brokers who sell retirement products, following a years-long clash that has involved multiple industry groups and U.S. lawmakers.
The rule will require brokers who give retirement account advice to become “fiduciaries” and act in clients’ best interests, instead of choosing products that line brokers’ own pockets. The rule goes into full effect in 2018. Under existing rules, brokers only have to ensure products are “suitable.”
Industry groups have argued that the new requirement will drive up costs and make it impractical for them to manage money for small investors.
“That’s not our view,” Casady said. “Our view is that consumers need help.”
In March, LPL severed ties with the Financial Services Institute, an industry group that represents independent broker-dealers and which also opposes the Labor Department rule.
“It’s best to be in organizations in which your interests are aligned,” Casady said.
On another hot topic for his industry, Casady said he is not overly concerned about the growth of so-called “robo-advice” products that let retail clients make decisions with less input from live financial professionals.
Follow Reuters Summits on Twitter @Reuters_Summits
Reporting by Suzanne Barlyn and Ross Kerber; Editing by Dan Grebler