Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...
By Sean Forbes
Nov. 1 — Note to retirement financial advisers: you need to learn now how new fiduciary requirements will impact your business. And you don’t have much time to get ready—the rule takes effect in April 2017.
The trouble is that many advisers are still foggy on the details of the Department of Labor’s fiduciary rule updating the Employee Retirement Income Security Act, also called the conflict-of-interest rule.
Results from Massachusetts bear out evidence that registered investment advisers, who are already considered fiduciaries under the Investment Advisers Act of 1940, aren’t sure how the rule will impact them. Three-quarters of state-registered RIAs, nearly all of whom provide advice on individual retirement accounts, were unsure how the DOL’s rule would affect them, Massachusetts Secretary of the Commonwealth William Galvin found in a survey of RIAs released in late October.
“The survey suggests that Massachusetts-registered investment advisers are unaware that the Fiduciary Rule holds all advisers providing advice to Retirement Investors to an ERISA standard,” Galvin said in the report. “Findings also show that Massachusetts-registered investment advisers are largely unaware of the impact the Fiduciary Rule will have on their obligations to Retirement Investors.”
Matt Matrisian, senior vice president of Concord-Calif.-based AssetMark Inc., found similar results when he surveyed financial advisers.
AssetMark offers a 15-question online tool for advisers to determine whether they’re ready to comply with the rule.
The results haven’t been positive. “Generally speaking, as we would expect, they feel like they’re not ready,” Matrisian told Bloomberg BNA.
At consulting workshops AssetMark has held for advisers, Matrisian has asked whether participants have clients that would be affected by the DOL’s rule. The majority have raised their hands. But when asked how many have taken steps to comply, all hands go down, he said.
Informal guidance that the DOL released Oct. 29 helped some, but advisers are also waiting for guidance from their broker-dealers, Matrisian said.
However, broker-dealers are also still wrangling with how to proceed, such as whether to stop offering commission-based products or to continue offering them, he said.
Matrisian suggested a few items for advisers to consider:
Plan sponsors, especially in the small-plan market, also need to educate themselves on what to do under the rule, Cynthia Hayes, president of Cartersville, Ga.-based Oculus Partners LLC, told Bloomberg BNA.
Smaller market plan sponsors are already busy juggling all the responsibilities of running their businesses, so determining the impact of the rule “is probably not at the top of their list to worry about,” Hayes said.
She said the rule should prompt small-plan sponsors to take two major steps:
To contact the reporter on this story: Sean Forbes in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)