Experts Offer Counsel and Caution on the DOL Fiduciary Regulation
While the industry has spent a lot of time, energy, effort and money getting ready for the Labor Department’s fiduciary regulation, four of the nation’s leading ERISA legal experts offer some final words of counsel — and caution.
Asked to provide any words of advice for those trying to comply with the Labor Department’s fiduciary regulation, former Assistant Secretary of Labor Brad Campbell (now with Drinker Biddle & Reath), Groom Law’s David Levine, Marcia Wagner of the Wagner Law Group, and Fred Reish of Drinker Biddle & Reath weigh in.
For small advisory firms, I believe they should consider pure level fee advice to IRAs. The cost and difficulty of satisfying the BICE conditions will probably be too burdensome for small firms. Generally, for advisers, I believe that the greatest potential for unknowing violations lies in capturing rollovers and in recommending the transfers of IRAs. In both of those cases, advisers should work with knowledgeable attorneys to develop their systems, policies and documentation. There is risk in recommending rollovers and IRA transfers.
Get help. Do not go it alone. Either from your home office or from competent ERISA counsel. The new rule is filled with landmines.
If it looks too good to be true, it probably is. While there will be commonalities among many compliance strategies, because each advisor or service provider is structured differently, careful attention needs to be paid to each organizations’ operational structures at a granular level.
For advisors: be patient, be flexible and don’t panic. As frustrating as it is to wait, the financial institutions with which you are affiliated have to make major business decisions based on a very complex set of rules where there is no one-size-fits-all compliance solution. This takes a little time. When a decision is made, it will almost certainly result in significant changes to the process and documentation related to your investment recommendations, and it may materially change your compensation arrangements. Change is coming, and we are going to have to adapt. However, don’t panic — we will get through this and you will be able to help your clients.