Although there are still some hoping the litigation against the DOL will result in a suspension of the rule or an outright repeal by a newly elected administration, it has been my experience that most have accepted the new regulation since it conditionally protects the sale of commissionable products. However, favorable opinion has not resulted in much action on the part of financial institutions to implement strategies to deal with the new reg.
While we await the DOL’s response to many questions, a plain reading of the statement above implies a new fiduciary standard of product expertise has been established that was not previously expected of advisors.
In this blog post, guest contributor David Witz of FRA Plan Tools, reviews how the DOL’s Fiduciary Rule will change the role and structure of the solicitor.
The new DOL Fiduciary Rule has not prohibited the solicitor structure, but the DOL has made a solicitor a fiduciary under ERISA; and as a fiduciary the solicitor now has more liability and responsibility. Does that hail the end of Solicitor Arrangements?
While those advisors that have avoided a “fiduciary” title will adapt to the new normal, one item that may catch them off guard: the SEC changes that impact Money Market Funds (“MMF”), which go into effect this October.
Advisors selling IRAs are now under an ERISA fiduciary standard of care that imposes an obligation to monitor their investment recommendations. This obligation imposes more work for no additional compensation. Advisors, possibly for the first time, will need to subscribe to technology that will produce a monitoring report on the investments held.
The wait is over. The OMB has released the Department of Labor’s(DOL) new fiduciary definition along with the promised exemptions. Without question, this new rule will affect every financial institution and advisor that sells and services retirement plans, IRAs and HSAs.
Before the new SEC fiduciary standard is published, advisors with a 401(k) and IRA Rollover practice and those advisors operating as investment managers of QDIAs have become a target for on-site examinations by the SEC’s Office of Compliance Inspections and Exams as part of their ReTIRE (Retirement Targeted Reviews and Examinations Initiatives) program since November 2015.