Leveraging Technology Ahead of the Fiduciary Rule in 2017

 The Department of Labor’s Conflict of Interest rule is anticipated to thrust advisers in the retirement services industry into an unprecedented regulatory space. With its April 10 implementation just months away, advisers are developing and seeking new strategies to comply with the so-called fiduciary rule.

To make tasks simpler, firms this past year have unleashed a wave of new tools, platforms and services to help advisers remain compliant ahead of the rule. These products help with various tasks including evaluating fund lineups, reexamining compensation practices, and documenting all these efforts to ensure proper disclosure and the mitigation of any conflicts of interest.

In this post, PLANADVISER will revisit some of these services.

With the wave of ERISA-related litigation seen this year, it’s not surprising that reevaluating fee structure is among the top of the list when it comes to preparing for the DOL rule, which extends fiduciary responsibility to virtually anyone offering investment advice in a retirement plan.

Broadridge Financial Solutions recently released a suite of compliance-focused tools including the DOL Fiduciary Solution which was designed to help advisers make investment decisions that meet fiduciary standards, by allowing them to evaluate whether funds and share classes on broker/dealer and other distributor platforms are appropriate for certain clients.  

The financial-technology company RiXtrema recently released FeeComp, a tool that will allow advisers to benchmark fee structures against others based on several factors including account size, geography and services offered, to prove they’re working in clients’ best interests. The SEI Advisor Network and Redtial collaborated to create the DOL Workflow Toolkit, which addresses several compliance tasks including switching from commission-based to fee-based investments.

Being able to accurately document steps taken to avoid conflicts of interest is also crucial. To help meet these needs, the firm fi360 launched the Fiduciary Focus Toolkit which helps advisers “adopt and create investment policy statements, investment watch-list criteria, client monitoring reports and other essential fiduciary-related activities,” the firm says.

Impact Financial Systems released the DOL Advisor Toolkit which offers various services including account reviews and assessments, documentation and audit trails as well as the distribution of best interest contract (BIC) disclosures, automated compliance actions, and more.

The investment consulting firm AssetMark released a new assessment tool which uses a series of strategic questions about compensation and compliance to generate a preparedness level. It’s a component of AssetMark’s DOL Readiness Campaign, which offers advisers a variety of resources to help comply with the rule.

In addition, the fiduciary rule will also affect how funds from ERISA-governed retirement accounts are rolled over into individual retirement accounts (IRAs). To simplify this process, PCS released its rollover tool which the firm says is fully DOL complaint and helps transition existing IRAs from commission-based to fee-based arrangements.

Of course, the future of the fiduciary rule has been placed on heightened scrutiny following the victory of President-elect Donald J. Trump. His pick for DOL Secretary shrouds it in even more uncertainty.

Nonetheless, industry experts argue that any change to the rule will likely not take effect until after its implementation. They urge advisers to keep their minds set on compliance and to take time to ensure whatever platforms or tools they’ve adopted align with their business before the deadline.

“There is some lag-time programmed into the rule to ease compliance, but post-April 10 is not the time to learn one’s solution will not be effective in real practice on the ground,” reads a recent analysis by Broadridge.