Demystifying the DOL Part 3: Operational Requirements

Demystifying the DOL Part 3: Operational Requirements

To comply with the requirements of the DOL, the advisory practice must be prepared to do the following by January 1, 2018. Conduct the Practice as a Fiduciary At the highest level, the DOL Fiduciary Rule states that the advisor must act as a fiduciary to the client. To do so, the advisor must be “prudent” and “loyal.” Prudence requires that the advisor operates with a high standard in terms of monitoring, managing, and advising the client of the status of the investment property. Loyalty requires that the advisor make decisions that are beneficial to the client first and foremost and that would not be considered in the primary interest of the advisor at the expense of the client. Partner with a “Financial Institution” to Execute the Best Interest Contract The DOL Fiduciary Rule creates significant financial liability for the distribution partner. Under the DOL Rule, the advisor must work …

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Why Cybersecurity Rules Are More Than Just Busywork

Why Cybersecurity Rules Are More Than Just Busywork

Cybersecurity rules can sometimes seem like overkill, but it’s important to follow them to the letter to keep customers’ data safe. “The result of data breaches can be costly, especially for small and midsize companies that cannot weather the costs and damage to their reputation,” says Steven Shapiro, a lawyer who has worked as chief privacy officer at a bank holding company and is now in private practice. “The cost can be in dollars lost in compliance to pay for the release of ransomware, loss of customers, dismissal of critical employees and in repairing one’s IT infrastructure.” Here are four reasons why following IT rules is so important, every time. 1. It’s the Law As technology advanced and it became easier to store — and disrupt — large electronic files, the U.S. government enacted legislation to regulate the storage and sharing of information. For those in the financial industry, provisions …

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Demystifying the DOL Part 2: Key Decisions for the Advisor

DOL Fiduciary Rule Key Decisions for the Advisor

Continue to Sell Products for Qualified Assets? At the highest level, financial advisors must decide whether the cost and effort of enhancing operations to accommodate all of the expectations of the DOL are such that it makes sense to remain in the business. Advisors who sell predominantly life insurance, LTC, or DI products with the occasional annuity sale may consider exiting the qualified fund business altogether. Although the legal liability is borne by the Financial Institution entering into the Best Interest Contract, the implications to the financial advisor may be considerable if the business practice must be altered substantially to continue to sell products for qualified funds. Continue to Sell Qualified Assets for Variable Compensation? The second consideration for an advisor is whether to accept variable compensation (i.e. commissions, marketing allowances, etc.) for the sale of annuities and mutual funds for qualified accounts. If the advisor alters his or her …

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Demystifying the DOL: Your Weekly Guide to the Impending Fiduciary Rule

DOL Fiduciary Ruling

The Department of Labor (DOL) Fiduciary Rule will have a profound impact on most advisors, distribution firms and carriers that work with qualified funds. In this weekly series, we want to help advisors, especially principal advisors, garner an understanding of the law, the implications of the rule on advisor operations, and what you can expect with respect to operations as the rule is implemented this year. In our first post we’d like to provide a brief summary of what’s to come. The Principal Advisor in a practice will be faced with a number of key decisions stemming from the DOL rule, including: Whether he or she wants to remain in the business of selling financial services for qualified funds. Whether to continue to receive commissions on the sale of products (versus aligning the business with a fixed AUM compensation model). The choice of distribution partner, which, in the DOL environment, is …

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6 Tips for a Better Employee Performance Review

6 Tips for a Better Employee Performance Review

The employee performance review process suffers from many problems. Namely, it lacks accountability and metrics, doesn’t allow for frequent feedback, and – here’s the big one – it doesn’t do the best job of actually assessing job performance. Nearly 60% of human resources executives graded their own performance-management systems a C or below, according to a survey by Sibson Consulting and WorldatWork. The survey reported that for more than half of the respondents, the biggest problem is managers’ inability to have difficult performance discussions. These meetings also have a public relations problem – they are viewed as an “HR process” that does not lead to any tangible goals. Should performance management be abandoned altogether? No. However it does need to be refocused into conversations that help employees reach their development goals and help your company get the most out of every team member. Use these 6 tips to help you improve …

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