Andrea McGrew could use some rest.

The chief compliance officer for USA Financial, an Ada, Michigan-based broker-dealer and registered advisory supporting about 150 investment professionals across the country, says she’s had her share of restless nights overseeing the firm’s effort to comply with the Labor Department’s fiduciary rule.

“It’s been a massive overhaul,” McGrew told BenefitsPRO. “The rule has created significant disruptions in for our advisor channel.”

If that sounds like more fiduciary-rule-opposition boilerplate, consider this: McGrew describes herself as a proponent of the rule, albeit a “cautious” one.

“Our stance isn’t that controversial,” says McGrew. “We’re not saying ‘this rule is terrible, get rid of it.’ We are happy to comply with the rule—we just need the Labor Department to let us know what it is.”

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Most of USA Financial’s reps feel the same way, she said—particularly those that have been fiduciaries all along. McGrew says about 70 percent of the professionals in the USA Financial channel were registered fiduciaries before the rule’s impartial conduct standards were implemented in June.

All told, the firm’s advisory and broker channels have about $262 million in assets under management, most in discretionary accounts, according to the firm’s Form ADV filing with the Securities and Exchange Commission.

That amount of cash makes USA Financial large in the eyes of the SEC, but relatively small compared to the behemoths. By comparison, LPL, the country’s largest independent broker-dealer, has about $480 billion in AUM.

USA Financial is pushing forward—and spending money—in preparation for the January 1, 2018 scheduled full compliance date for the rule.

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Stakeholders across industry are asking the Labor Department to delay that date. In comment letters, they argue that the strong signals the agency has sent regarding revisions to the rule justify the delay.

In its comment letter to Labor, TD Ameritrade said it would be “wasteful” to implement compliance procedures for a rule that is likely to change.

That firm, which provides custodial services for more than 5,000 independent RIAs, not only wants the rule delayed, but wants a heads up from Labor soon—which is to say now.

That argument aligns with McGrew’s frustration.

“I liken this whole thing to a tennis match—a constant back and forth. It seems like everyday you hear something new that adds to the uncertainty—an RFI, or testimony from the SEC,” said McGrew.

All the while the firm continues to invest in new technology, talent, and legal consultations to assure it’s on a secure path. “So what do we do—invest millions into something that we ultimately have to scratch?”

A delay would be subject to a legal challenge?

Consumer advocates who want the rule implemented as written argue that industry has had plenty of time to achieve compliance.

Not only was industry afforded considerable input by the Labor Department over the six years it took to finalize a rule, but Obama-era regulators were in fact generous in pushing full compliance out to 2018, proponents of the rule argue.

Delaying the January 1 implementation date will cost investors millions in conflicted advice, and may not even be lawful, according to one proponent of the rule.

Better Markets, a non-partisan think tank that advocates for transparency in financial markets, said a delay of the rule would be “arbitrary and capricious,” and subject to a legal challenge, according to the group’s comment letter.

USA Financial’s McGrew thinks the perspective that industry has had enough time to comply betrays a lack of appreciation for the rule’s complexity.

“Proponents that say we’ve had enough time may not have a lot of experience on the operational side of the business,” said McGrew.

“Putting clients’ interest first will always be our number one priority,” she added. “But this is a broad rule with a lot of rat holes. For most of our advisors, a best interest standard is nothing new. They embrace that, and they want a leveled playing field.”

But the challenge—and source of frustration—for advisors is the new complexity of proving they are giving best interest advice, something McGrew says the advisers in the USA Financial channel have been doing all along.

“We’re trying to make this as palatable as possible,” she added. “But it has been an evolving process. You can’t have simple compliance mechanisms for such a complex rule.”

McGrew noted the nascent development of clean share mutual funds, which strip 12b-1 fees in order to create level fees among investment offerings, as just one of the many operational snafus the rule has created.

The Capital Group, owner of American Funds, is one of a few firms that has filed clean shares with the SEC. In its comment letter to Labor, the firm says industry will need up to two years to reorganize distribution channels to accommodate clean shares.

“Now we need a solution to this problem that no one realized was a problem when this rule came into effect,” said McGrew on the prospect of clean shares’ role in complying with the rule.

$1 million and counting

So far, McGrew says USA Financial has spent over $1 million in complying with the rule.

Under the Labor Department’s cost analysis of the rule, medium size broker-dealers, with assets between $50 million and $1 billion, were expected to incur between $1.2 million and $1.7 million in start-up compliance costs.

USA Financial has not pulled investments from its platforms. The firm also distributes annuities through its independent marketing organization arm.

“We don’t think that the essence of the rule is to punish a client,” said McGrew. “And we don’t see any particular product line as evil. Under the right circumstance, with the right client, provided there is the right oversight, all products can be the right investment.”

She said she’s concerned that reports of other broker-dealers culling products from platforms could limit investor choice.

“I worry about knee-jerk reactions of pulling product lines, though I get why firms are doing it,” said McGrew. “But to us that felt detrimental to both our reps and our clients. Until we know what the final rule looks like, we want our advisors to have access to all options.”

The company has been overseeing the suitability of recommendations on annuities for 13 years through its IMO arm—McGrew doesn’t fear major upheaval to those products under the fiduciary rule, because she thinks they’ve been recommended appropriately all along.

But the advisors in USA Financial’s channel do have different business models, and that has presented a challenge. In some cases, advisors have arrangements with life insurance underwriters outside of USA’s IMO channel.

Instead of prohibiting those sales, McGrew says they will be sold under PTE 84-24. Liability will be shared with the advisor and the insurance company—not with USA Financial.

McGrew says she draws some peace of mind from the fact that much of what the firm has implemented will stay in place, no matter what becomes of the rule.

“We’re using this as a spring board to better our advisors’ practices—that’s our mindset,” she said.

Still, all of the uncertainty around the fiduciary rule is unnerving for McGrew, who as a compliance chief is risk averse by nature.

“It feels like the wild west out there,” added McGrew.