While the DOL Fiduciary Rule is currently in flux, the principal Advisor in a firm still needs to understand the law and the implications of the rule on advisor operations. To help you evaluate the impact on your business, download our free white paper titled Operational Guide for BGAs, FMOs and TMOs Under the DOL Fiduciary Rule. It is an indispensable guide to ensuring that all aspects of your operations are aligned so that your advisors can act as fiduciaries.
There’s been a lot of confusion in the past few days about the fate of the Department of Labor’s (DOL) Fiduciary Rule. It was widely reported on Friday that President Trump would be signing an order to delay the rule for six months pending further investigation. However when the order was finally issued on Friday afternoon things changed once again, so let’s get to the bottom of things. Only one order was signed (not two as originally expected) which had no specific reference to the Fiduciary Rule. Instead, President Trump has directed the Secretary of the Treasury to conduct a 120-day review of all laws and regulations related to the financial industry. The President also signed a memorandum on the Fiduciary Rule which although doesn’t specifically call for any delay in the ruling does call for a substantial review. According to Section 1 of the memorandum, “You [DOL] are directed …
The advisor practice should be prepared to add new procedures and technology platforms to support the DOL operating environment. The requirements of an advisory practice to support DOL comprehensively will involve the capabilities and technologies described in the sections below. Contact Management/CRM Many agencies and advisory firms employ a form of Client Relationship Management (CRM) platform in conjunction with the practice. For many firms, however, the DOL will likely dictate a more comprehensive use of such a platform than many firms currently employ in operations. In the field, the CRM will be required to document prospect and client communications, since most communications can be construed as “recommendations” under the DOL and the advisor must avoid any recommendation that contains “misleading statements.” As such, the advisor and staff will likely have to thoroughly document these communications as a requirement of the Financial Institution and make the content discoverable and accessible in …
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 …
In a month and a half, the DOL Fiduciary Rule will take effect and many in the financial industry are adopting a “wait and see” approach to the rule, with plans to adapt their business once the rule takes effect.
Ebix Consulting partnered with some of the industry’s leading experts to develop a webinar that addresses your concerns about the impending fiduciary rule and discusses a number of ways you can start preparing now.
To learn more about how you can implement solutions for the DOL Fiduciary Rule, contact us today!