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DALBAR Says Adviser Certifications FAB-Ready

In light of the Department of Labor’s (DoL) latest regulatory pronouncement on offering participant investment advice, DALBAR has already updated its two plan adviser certification programs.
Reported by Fred Schneyer
A news release said that certification requirements now incorporate the DoL guidance (See DoL Releases Guidelines for PPA’s Fiduciary Adviser), and the evaluation process has also been expanded. For example, a new DoL requirement for Fiduciary Advisers incorporated into the program is that both the adviser and his firm must both be certified as a Fiduciary Adviser.

According to the news release, the following steps constitute the revised process for the 401(k) Adviser Certification and the Fiduciary Adviser Network (FAN) programs:
  • declarations for 401(k) certification are expanded to include the fee offset requirement and the acknowledgement that the adviser is acting as a fiduciary of the plan.
  • disclosures now include any potential self-dealing or conflicts of interest and disclosure of the investment theory that is used as the basis for rendering advice.
  • FAN Training is expanded to include new DoL requirements and the certification test is also expanded to test knowledge of new DoL requirements.
  • renewal will now include, in addition to background and quality check, a review of actual utilization of the adviser’s services.
The background check and quality check already include DoL requirements and remain unchanged, the firm said. The listing standards for the FAN Network are unchanged, as is the FAN annual audit.

According to DALBAR, already-certified advisers will submit to the revised process at their next anniversary, while those applying for the first time will immediately use the revised process, according to the announcement.

The FAN program is a joint venture from DALBAR, Inc. and PLANSPONSOR, designed to pre-qualify financial professionals to act as fiduciary advisers and to provide the due diligence and documentation required by the Pension Protection Act of 2006. FAN will give plan sponsors and providers a source of advisers to support 401(k) and 403(b) plans with independent advice to plan participants.

FAN is a turnkey solution designed to prepare advisers to meet the standards of prudent selection required by PPA. FAN provides the training, due diligence, and access to employers that advisers need in order to realize the income opportunities of being a Fiduciary Adviser. FAN supports individual practitioners, small and large practices, as well as advisory services of major RIAs, banks, insurance companies, and broker/dealers.

Using DALBAR ratings, advisers are able to overcome the SEC prohibition against using customer experiences in promotion or other disclosures, a critical distinction in differentiating themselves in the marketplace. This is critically important to the selection of fiduciary advisers by multiple employers. It simply is not practical for every employer to repeat the due diligence process for each fiduciary adviser. Through FAN, the adviser needs to undergo the due diligence only once for all employers.

More information on the Fiduciary Adviser Network (FAN) can be found at www.FiduciaryAdviser.com and further details on 401(k) Adviser Certification is at www.DALBAR.com.