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The Fiduciary Rule Odyssey: Phyllis Borzi at the Helm
"Standing at the center of that narrative is a woman with a hard-shell concept of right and wrong and who was beat back by those who didn't see the black-and-white nature of her ideal. After patching up the battle scars from an early defeat, she regrouped with a powerful duo and conceded to the reality of gray, in one last drive to change the financial advice business forever." (InvestmentNews)
First Quarter Retirement Savings Analysis: Account Balances Lower, Long-Term Savers See An Increase
"The average 401(k) balance dipped slightly at the end of Q1 and is down roughly five percent from the record high balance at the end of Q1 2015. The average IRA balance also decreased at the end of Q1, and is also down five percent from one year ago.... The average balance for people who have been in their 401(k) continuously for 10 years increased 2 percent year-over-year to $240,700. For long-term savers between the ages of 35-39 -- when, according to Fidelity, individuals should aim to have saved between two to three times their salary in retirement savings -- the average balance was $131,000 at the end of Q1." (Fidelity)
There's Rare Good News on the Retirement Front
"A record 13.6 percent of 401(k) participants raised their savings rate during the first quarter this year. Overall, employee contributions, combined with employer matching funds and profit sharing, rose 12.7 percent to reach another record. Not only are savings rates up, but more people are saving in both a 401(k) and an Individual Retirement Account ... Fidelity's universe of double-barreled savers is up 7 percent from a year ago, to 1.3 million people, with an average contribution of $11,600, up $300." (Bloomberg)
House Passes Resolution to Block DOL Fiduciary Rule
"H.J. Res. 88, which passed the House by a vote of 234 to 183, will... [1] Protect access to affordable retirement advice for all Americans. [2] Ensure small business owners can continue to find the advice they need to help their employees plan for retirement. [3] Build upon a larger, bipartisan effort to strengthen protections and help all Americans retire with the financial security and peace of mind they deserve." [Editor's note: the President has stated he will veto the resolution if is presented to him (i.e., if it is approved by the Senate).] (Committee on Education and the Workforce, U.S. House of Representatives)
Fiduciary Enforcement: How Advisers Can Avoid Legal Trouble (Part 2)
"The DOL retains the right to evaluate an institution's policies and procedures, and has vowed that it will be 'closely monitoring' institutions as they roll out new policies and procedures in the coming year.... [T]he agency can potentially declare that the institution has failed to meet the best interest contract requirements -- which would render the firm ineligible for the necessary prohibited transaction exemption, causing all of its advisors and conflicted compensation to be in violation of the rules, a potentially catastrophic outcome that institutions will desperately wish to avoid." (Michael Kitces, in Financial Planning)
The DOL Fiduciary Rule: How Advisors Can Comply and Thrive (Part 1)
"In essence, financial services product companies claimed that they can offer often illiquid and opaque, commission-based and sometimes even proprietary products to consumers, while also receiving revenue-sharing agreements, and still act simultaneously in a client's best interests as a fiduciary ... [W]hile the fiduciary rule didn't outright regulate what the financial industry can and cannot do, it did change the legal standard by which the industry's actions will be judged, and ensure that eventually the courts will have the opportunity to rule on these fiduciary conflicts. And in the long run, that will be a world of difference." (Michael Kitces, in Financial Planning)
[Guidance Overview] DOL New Fiduciary Regulation: Action Items for the Next Year
"Understand that this rule is directed at investment advice, and is not confined to defined contribution plans -- HSAs with investment components are subject to this rule ... Review any agreements or correspondence from service providers... and note where changes may be forthcoming from the providers, including potentially higher fees ... Review any communications to plan participants regarding rollovers and distributions to ensure that no particular recommendations are inadvertently being made ... Review who the employees are (and how they are compensated) who regularly communicate with plan participants and beneficiaries, and educate them about the new rule's requirements." (Findley Davies)
The IRS Attack on Illiquid IRAs
" 'The IRS has long believed that there is substantial noncompliance with minimum distribution requirements,' says Natalie Choate, an attorney with the Boston law firm Nutter McClennen & Fish.... Choate points to two windows: Form 5498, filed annually with information on how much an IRA account is valued and whether a distribution is required, and Form 1099-R, which reports the amount of any distribution. Starting with the 2015 versions of these forms, due in the first half of 2016, IRA custodians must reveal the presence of hard-to-value assets, and the asset type.... The new information from the forms can show the agency which large IRAs with illiquid assets are in the RMD stage." (Financial Planning)
[Guidance Overview] The DOL's New Fiduciary Rules for Retirement Investment Advice
"In applying the new fiduciary definition, a critical threshold question is whether a communication is a 'recommendation.' Borrowing from FINRA's definition, the final regulation defines 'recommendation' as 'a communication that, based on its content, context and presentation, would reasonably be viewed as a suggestion that the advice recipient engage in or refrain from taking a particular course of action.' The DOL also borrowed from select SEC and FINRA interpretations about recommendations regarding the degree of individually tailored communications, lists of securities, aggregating communications, and disregarding whether the source is a person or a computer." (Faegre Baker Daniels LLP)
[Guidance Overview] The DOL's Final 'Fiduciary' Rule -- Countdown to Implementation Begins in Earnest
"In general, the structure of the Final Rule gives fund sponsors more basis for contending that their sales activities should not be treated as a 'recommendation' ... The Preamble indicated that the DOL did not intend to depart from a 'plain and natural reading' of the term 'investment advice' in the statutory text of ERISA.... The DOL also stated (in the Preamble only) that a communication must involve a 'call to action' in order to rise to the level of a recommendation.... By removing the 'asset list' in the BIC Exemption, the scope of the exemption expands significantly, and comes closer to becoming the 'principles-based' approach intended by the DOL." (Jones Day)
[Opinion] ICI Urges Congress to Reject DOL Fiduciary Rule
"While the Department's final rule reflects a number of modifications, the basic structure of the proposed rule remains intact. Like the proposed rule, the final rule imposes significant new liability through a complicated, back-door regulatory regime that will have the effect of limiting available advice options for many savers. As a result, implementation of the rule will make it more difficult for low- and middle-income Americans to save for retirement. Small businesses, in particular, will find it more difficult to offer their employees saving opportunities." (Investment Company Institute [ICI])
Even 'Softer' Fiduciary Rule Will Challenge Providers
"One veteran retirement plan adviser predicts the real impact of the new DOL fiduciary rule will take shape over the long-term -- and firms' initial attempts at compliance may not represent their final approach." (PLANSPONSOR)
The Impact of 'Next Generation' IRAs: myRA Accounts, EZ IRA and State-Mandated IRAs (PDF)
"Given the critical role that IRAs have in wealth management and retirement planning, it is important for employers as well as retirement and payroll service providers to educate themselves on these next-generation IRAs. With a more complete understanding of these new types of payroll IRA programs, employers will be able to make informed decisions when selecting an appropriate retirement savings vehicle for their employees, and providers will be able to offer up-to-date guidance to them." (The Wagner Law Group)
[Guidance Overview] Q&As on DOL Fiduciary Rule: Rollovers and IRAs
"Would the definition of 'investment advice' include a rollover from previous 401(k) to current 401(k)? ... How can a level fee plan fiduciary advisor accept a participant's rollover and manage the IRA rollover assets with a level fee? ... Will rollover analysis be required for any IRA rollover advice? ... Because BICE is not available to advisors with discretion does that mean that advisors who are fiduciaries on a retirement plan cannot recommend a rollover to an IRA and use BICE to avoid the prohibited transaction issue due to uneven compensation?" (fi360)
Three Five-Year Rules for Roth IRAs You Need to Know
"[1] Five-year rule for penalty-free distributions of converted funds ... [2] Five-year rule for tax-free distributions of earnings ... [3] Five-year rule for beneficiaries." (Slott Report)
Protecting Access to Affordable Retirement Advice
"To protect access to affordable retirement advice, Rep. Phil Roe (R-TN), along with Reps. Charles Boustany (R-LA) and Ann Wagner (R-MO), introduced H. J. Res. 88. The resolution would invoke Congress's powers under the Congressional Review Act to prevent the department's rule restricting access to retirement advice from going into effect." (Committee on Education and the Workforce, U.S. House of Representatives)
Dear Agents: This is Your Life Under 'Best Interest'
"Performance incentives, bonuses, contests, special awards, trips, appraisals and sales quotas -- favorite levers of insurance companies to spur their armies of distributors are going to change ... Who decides what programs to keep, what to drop and how incentive programs change? The insurance carriers and broker-dealers themselves and there's going to be a lot of pressure on broker-dealers to re-evaluate compensation practices." (
[Guidance Overview] A Plan Sponsor Overview of the Fiduciary/Conflict of Interest Rule (PDF)
"The final rule is not applicable until 2017, and a new presidential administration or courts could modify the final rule before it goes into effect. In the meantime, however, in response to the final rule, it may make sense for plan sponsors to review their investment education material. Investment fiduciaries' attendance at fiduciary training with a focus on selection and monitoring duties could also be helpful as the rule's impact becomes more clear under various factual scenarios." (Xerox HR Services)
[Guidance Overview] The DOL's Finalized Fiduciary Rule: What You Need to Know
"The DOL's ultimate goal is to impose a universal 'Best Interest' fiduciary standard on all types of advisers to plan sponsors, participants and IRA owners.... Plan sponsors now must understand how their providers are affected by the new rules, lest their compensation be a prohibited transaction for which the plan sponsor could be jointly liable.... [Plan] sponsors should be prepared for the likelihood that vendors will present them with new or modified documentation, as the vendors seek to qualify under one of the now finalized regulatory regime's exceptions or exemptions or to clarify their fiduciary status. Sponsors should be aware that such changes could take the form of a negative consent requiring no affirmative action by the sponsor." (The Wagner Law Group)
[Guidance Overview] Education or Advice: The DOL Final Definition of Fiduciary; Conflict of Interest Rule
"A notable difference between the Final Rule and the 2015 revised proposal is that the Final Rule does not consider appraisals, fairness opinions, or similar statements concerning the value of securities or other property to constitute investment advice. All appraisals and valuations, not just those for ESOPs, are excluded from the rule.... Since the Final Rule requires that an independent fiduciary have oversight of the specific designated investment alternatives, this exception does not apply to any presentations of asset allocation models or interactive investment materials to IRA owners. Presentations to IRA owners may not include specific alternatives without being considered investment advice." (Benefits Bryan Cave)
Potential Challenges to the DOL's Conflicted Advice Rule? (PDF)
"Some have expressed concern that the DOL went too far and 'caved' to the pressure of opponents. The fact that both proponents and opponents of the guidance have some issues with the final product is an indication that the DOL may have found some common ground.... Preventing the implementation of the rule at this stage of the process has little precedent." (Ascensus)
House Committee Approves Resolution to Stop Fiduciary Rule, Protect Access to Affordable Retirement Advice
"The House Education and the Workforce Committee, chaired by Rep. John Kline (R-MN), today approved a resolution (H.J. Res. 88) to block the [DOL]'s 'fiduciary' rule and protect access to affordable retirement advice for low- and middle-income families.... Led by Rep. Roe, lawmakers advanced complementary bipartisan proposals that would require financial advisors to act in the best interests of their clients, and ensure low- and middle-income Americans have access to quality, affordable retirement advice. The House has also taken action on legislation sponsored by Rep. Wagner that would have required the department to coordinate its actions with the [SEC]." (Committee on Education and the Workforce, U.S. House of Representatives)
[Guidance Overview] The New Fiduciary Rules: What Do You Need to Know and Do Now? (PPT)
51 presentation slides in PowerPoint format. Topics: [1] Rollout of new rule; [2] New fiduciary advice definition; [3] Exclusions from fiduciary advice definition; [4] BIC exemption; [5] PTE 84-24; [6] Fee levelization; [7] Robo-advice; [8] Rollovers; [9] Managed accounts; and [10] Practical considerations. (The Wagner Law Group)
[Opinion] Why Luring 401(k) Assets to IRA Rollovers in a Post-DOL-Rule World Remains Child's Play, Which Keeps $7.6 Trillion in the IRA Game and Growing
"Assets will flow unimpeded to IRAs from 401(k) plans for two very different kinds of reasons, says Bing Waldert, managing director of Cerulli.... [T]he final DOL rule was watered down over the course of its protracted comment period to make it possible for a broker to have a client sign away protections by means of an exemption to the best interest contract. In other words, brokers are accustomed to saying: 'If you don't mind initialing this: It just says we're doing the best we can for you. I have a better pen if you need one.' ... Investors are unlikely to register that change amid the barrage of paper they are wading through[.]" (RIABiz)
[Guidance Overview] What Advisors Need to Know About the New Fiduciary Rule
"For years, the [DOL] issued exemptions that were extraordinarily narrow in scope and very much transaction-based. In a complete reversal, however, on the same day as it unveiled its new Fiduciary Rule, the DOL also unveiled a 300+ page document that introduced a new, broad, principal-based prohibited transaction exemption, known as the Best Interest Contract Exemption [BICE].... [T]he BICE was intentionally created to be extremely broad and covers just about all the current standard compensation models and industry practices." (Slott Report)
Service Providers Express Tremendous Uncertainty About Changes Required to Meet New Fiduciary Regulation (PDF)
"4% of the firms indicated that they would become a fiduciary for the first time under the new regulations, while 23% would continue to be a fiduciary, and 30% said they planned to continue under a non-fiduciary status. However, 34% of firms indicated that they are unsure which direction to take.... 60% indicated that key parts of the regulation are still not clear. 75% are watching to see how their peers are interpreting and addressing the regulation. 49% are looking for guidance from industry organizations." (The SPARK Institute)
[Opinion] Assessing the Final DOL Fiduciary Rule
"[M]any of the critical fixes to the Fiduciary Rule called for by the U.S. Chamber of Commerce remain unaddressed or were made worse in the final rule. These include important issues such as whether the final rule discriminates against small businesses, limits the availability of investment education, substantially increases litigation risk to the detriment of savers and the retirement system, and gives insufficient time to implement the final rule." (U.S. Chamber of Commerce)
DOL Accused of 'Legislation by Rulemaking' on Fiduciary Rule
"Congress 'did not intend' for DOL 'to become a primary regulator of the conduct and compensation of financial advisors to individual retirement accounts,' [former EBSA Secretary Brad Campbell] said, nor did Congress intend for the 'unique fiduciary standard of care applicable to employee benefit plans under ERISA to apply to IRAs.' " (ThinkAdvisor)
CBO Cost Estimate for H.R. 4294, Strengthening Access to Valuable Education and Retirement Support Act of 2015 (PDF)
"H.R. 4294, the Strengthening Access to Valuable Education and Retirement Support Act of 2015, would amend the section of the Internal Revenue Code that prohibits self-dealing transactions by fiduciaries of certain tax-favored plans, including employer-sponsored retirement plans, individual retirement accounts, and health savings accounts. The bill would add a definition of investment advice ... [and] a new statutory exemption related to investment advice that a fiduciary can provide to those tax-favored plans, plan participants, or beneficiaries.... H.R. 4294 would change requirements regarding disclosure of potential compensation accruing to the fiduciary or an affiliate.... The staff of the Joint Committee on Taxation (JCT) estimates that the bill would have a negligible effect on revenues over the 2016-2026 period. Enacting the bill would not affect direct spending." (Congressional Budget Office [CBO])
CBO Cost Estimate for H.R. 4293, Affordable Retirement Advice Protection Act (PDF)
"H.R. 4293, the Affordable Retirement Advice Protection Act, would amend portions of [ERISA] that prohibit self-dealing transactions by fiduciaries of employer-sponsored retirement plans. The bill would add a definition of investment advice... [and] a new statutory exemption related to investment advice that a fiduciary can provide to those plans, plan participants, or beneficiaries.... H.R. 4293 would change requirements regarding disclosure of potential compensation accruing to the fiduciary or an affiliate.... CBO and the staff of the Joint Committee on Taxation (JCT) estimate that the bill would have a negligible effect on revenues over the 2017-2026 period. Enacting the bill would not affect direct spending." (Congressional Budget Office [CBO])
[Opinion] A Case for Suing the DOL Over Its Fiduciary Rule
"[In] creating the Fiduciary Rule, the [DOL] never analyzed the impact on the fixed annuity marketplace, including the fixed indexed annuity marketplace. Also, by their own admission, in the flawed impact analysis they did conduct, they did only a cursory review of variable annuities ... As a result, they failed in their primary duty to Congress to provide a thorough analysis of both the costs and the benefits the rule will provide in the marketplace(s) it will affect. The department used selective and inconclusive analysis and arrived at their predetermined justification ignoring the multibillion dollar marketplace of IRA annuities." (
[Guidance Overview] DOL Finalizes Fiduciary Definition and Conflict of Interest Rule
"The final rule first describes the kinds of communications or categories of advice that constitute 'investment advice.' It then describes the types of relationships and circumstances that give rise to fiduciary investment advice and thus subject the advice provider to fiduciary standards and certain prohibited transaction rules intended to address conflicts of interest and those types in which they do not. [This article includes] summaries of these two parts of the final rule, along with observations on the differences between the final rule and the proposed rule." (Proskauer Rose LLP)
[Guidance Overview] Employer Action Required Following Issuance of DOL Final Fiduciary Rule
"Employers should ... expect that advisors may want to renegotiate their service arrangements for various reasons, such as: [1] To change the scope of investment advice or education provided to the plan or its participants, [2] To revise compensation arrangements to ensure that no prohibited transaction occurs by virtue of the receipt of such compensation, [3] To provide necessary disclosures or acknowledgments to ensure the arrangement fits within an applicable exception to the final rule, and [4] To incorporate required provisions under the newly issued Best Interest Contract Exemption or other applicable prohibited transaction exemptions and advisory opinions to avoid exposure to possible excise taxes." (Winstead PC)
[Guidance Overview] A Brave New World for Investment Advisors Following Issuance of Final Rule
"As a fiduciary investment advisor to an ERISA-governed plan, the person will become subject to the fiduciary standards of care under ERISA and could be personally liable for losses resulting from the recommendations given to the plan or participants. It is irrelevant whether the plan to which the advice is provided is a participant-directed plan under ERISA Section 404(c). Although fiduciaries are not generally liable under an ERISA 404(c) plan for investment losses that are the direct and necessary result of the participants' directions, that protection does not extend to advice that is provided to the participants imprudently or that implicates a prohibited transaction." (Winstead PC)
House Committee to Mark Up Resolution Blocking Fiduciary Rule, Protecting Access to Affordable Retirement Advice
"On Thursday, April 21 at 9:00 a.m., the Committee on Education and the Workforce, chaired by Rep. John Kline (R-MN), will consider a resolution (H.J. Res. 88) that would block the [DOL]'s controversial 'fiduciary' rule. The resolution was introduced by Rep. Phil Roe (R-TN), chairman of the Subcommittee on Health, Employment, Labor and Pensions, along with Reps. Charles Boustany (R-LA) and Ann Wagner (R-MO)." [Live webcast of the hearing will be available online.] (Committee on Education and the Workforce, U.S. House of Representatives)
[Guidance Overview] The DOL's Final Fiduciary Rule Is Here: a First Look for Plan Sponsors (PDF)
54 presentation slides. Topics: Why the need for a new fiduciary rule? Who is a fiduciary? A review of the 1975 Rule; The rulemaking process and the Proposed Rule; Why plan sponsors should pay attention; Final Rule brings new definition of investment advice; Exceptions; Compensation requirement; Best Interest Contract (BIC) exemption; and Implementation deadlines. (Trucker Huss)
House Members Move to Block Fiduciary Rule, Preserve Access to Affordable Retirement Advice
"Rep. Phil Roe (R-TN), chairman of the Education and the Workforce Subcommittee on Health, Employment, Labor, and Pensions, along with Rep. Charles Boustany, chairman of the Ways and Means Subcommittee on Tax Policy, and Rep. Ann Wagner (R-MO), today introduced a resolution, under the Congressional Review Act, to block the [DOL's] (DOL) controversial rule restricting access to investment advice. Known as the 'fiduciary' rule, the rule will make it harder for low- and middle-income families to save for retirement and creates new obstacles for small business owners who want to offer employees options to save for retirement." (Committee on Education and the Workforce, U.S. House of Representatives)
[Guidance Overview] DOL Issues Long Awaited Final Rule on the Definition of an ERISA Fiduciary (PDF)
"Legislative efforts to try to derail the new rule are expected, but that path forward is difficult ... Litigation also is expected, with a likely focus on the process under which the rule has been formulated and/or on the substantive features of the rule, particularly its application to IRAs.... Plan sponsors are well advised to review all of their existing relationships with service providers to determine whether those service providers should be treated as fiduciaries under the new rule, including consideration of the carve outs and the BICE, and to revise their relationships accordingly." (Plan Sponsor Council of America [PSCA])
These Roth Accounts Have Required Minimum Distributions
"Designated Roth accounts, or DRAs for short, are Roth accounts held inside an employer-sponsored retirement plan, like a Roth 401(k) or Roth 403(b).... Although Roth IRAs have no RMDs during your lifetime, designated Roth accounts are subject to RMDs.... Roth IRAs have no RMDs during your lifetime, but if there is any money left in your Roth IRA when you die, your heirs -- other than (possibly) your spouse -- will have to take RMDs from the inherited Roth IRA." (Slott Report)
[Guidance Overview] DOL Issues Final Fiduciary Rule and Related Exemptions
"The conditions that apply to the sale of proprietary products and the receipt of third-party payments present a high threshold, one that may not be easy for a financial institution or adviser to meet. Sellers of relatively low-fee proprietary investments may be able to make the case that they qualify, but many financial institutions and advisers will find it difficult to accept the risk that they can be second-guessed by ['retail' plan and IRA investors, called Retirement Investors in the rule,] or the DOL[.]" (DLA Piper)
[Guidance Overview] The New Fiduciary Regs: A Practical Review, Part I (PDF)
"The new Regulation Package ... does not attempt to redefine who is a fiduciary.... [If] you give advice and get paid for it, you are a fiduciary. What the Regulation does do is to clarify what constitutes 'fiduciary advice.' The DOL then endeavors ... to provide fiduciary advisors with a structure under which they may be paid in a 'customary' manner -- i.e., flat fees and certain variable fees.... Step 1: Are you giving advice? ... Step 2: Are you a fiduciary vis-á-vis that advice? ... Step 3: I'm a big shot fiduciary, too, exception ... Step 4: Okay, I'm a fiduciary. So what?" (Ferenczy Benefits Law Center LLP)
[Opinion] Seven Reasons Why the DOL Rule Is Flawed to the Point of 'Folly'
"[1] It's based on rules, not on principles ... [2] It's subjective, not objective ... [3] It's complex, not simple ... [4] It's exclusive, not inclusive ... [5] It's negative, not positive ... [6] It was driven by self-serving interests, not the best interests of retirement savers ... [7] It's a bronze standard, not gold." (Don Trone, in RIABiz)
[Guidance Overview] Tweaks to Final DOL Fiduciary Rule Help Ease Implementation Without Sacrificing Core Principles
"One of the big surprises in the final rule was the inclusion of equity-indexed annuities under BICE.... Fixed annuities remain under PTE 84-24, which was itself strengthened. It was also somewhat surprising that the DOL completely removed its restricted menu of investment products available under BICE. Previously only traditional investments such as bank deposits, CDs, mutual funds, exchange-traded REITS and ETFs were eligible. Now, any product is available.... Finally, the DOL indicated that an adviser's monitoring responsibilities can be specifically limited in a client engagement. However, the DOL also made clear that it would be very difficult for a fiduciary adviser to justify not monitoring a recommended course of action that is risky or volatile." (fi360)
[Guidance Overview] DOL Finalizes Overhaul of Investment Fiduciary Definition
"[T]wo implications for larger plans are... [1] A consultant who is hired by a plan to provide investment advice on a one-time basis will now be considered a fiduciary. For example, a consultant who is hired to assist in selecting an annuity provider in connection with the termination of a defined benefit plan will be considered a fiduciary as a result of providing investment advice.... [2] Any recommendation as to the amount and destination of a distribution or rollover from a retirement plan also constitutes investment advice resulting in fiduciary status under the new rule." (Mazursky Constantine LLC)
[Guidance Overview] An Overview of the Fiduciary Rule
"[T]he impact of the fiduciary and Best Interest standards of care has not been adequately considered.... In both cases (that is, the prudent man rule and the Best Interest standard), the adviser's recommendations will be measured by what a hypothetical prudent and knowledgeable investor would do. In other words, it is the standard of a hypothetical knowledgeable person, and not the standard of the actual adviser or the investor.... [B]roker-dealers will be affected the most. Insurance companies will also need to make changes.... [M]ost RIAs will only need to make changes to adjust to the new rules regarding recommendations of distributions and rollovers from plans and withdrawals and transfers of IRAs.... Recordkeepers who have insurance companies or mutual fund manager affiliates will be impacted more than independent recordkeepers." (
[Guidance Overview] The DOL's Final Rule Redefining Fiduciary (PDF)
35 pages. "The breadth of the definition itself will make virtually anyone speaking with a plan participant or an [IRA] owner into a fiduciary unless an exception is met. Rollover recommendations are now defined as fiduciary advice, as is advice on the type of account (brokerage versus advisory) and lists of securities that might meet a plan or IRA client's needs... [It] will be nearly impossible for retail brokers, insurance agents and consultants to avoid fiduciary status when dealing with plans or IRAs." (Steptoe & Johnson LLP)
[Opinion] Five Ways the Administration's Fiduciary Rule Could Undercut Americans' Saving for Retirement
"The tax code delegates to the Department of Treasury sole enforcement authority over IRAs, recognizing that private lawsuits are inefficient, inexpensive, and often do not have the best interests of the clients in mind. The final fiduciary rule, however, allows for -- even encourages -- IRA rules to be enforced through class action lawsuits. Not only does this change exceed the Administration's regulatory authority in this area ... it also is expected to create needless and expensive litigation, scare off potential retirement advisors, and make it harder and more expensive for Americans to obtain retirement advice." (Committee on Ways and Means, U.S. House of Representatives)
[Opinion] Takeaways from a Securities Law Veteran's Reading of All 1,000+ Pages of the DOL Rule
"The brokerage industry got exactly what it wanted from the new DOL rule: A sufficiently new take on the old problem of getting advisors to put clients first but nebulous enough that reasonable doubt is none-too-difficult to take hold in arbiters' minds.... The new rule contains reassuring -- for RIAs -- new words like 'fiduciary' and 'best interest.' But what [the author] could not find in the sea of words that make up the new rule were words that could help a tort attorney." (RIABiz)
[Guidance Overview] DOL Issues 'Conflict of Interest' Rule on Investment Advice: Fiduciary Net Will Widen on April 10, 2017
8 pages. "Together, the new rule and the BIC Exemption, along with several other new and amended prohibited transaction exemptions, aim to reshape the marketplace for retirement investment advice. This [article summarizes] the final rule and the BIC Exemption and highlight key substantive changes between the proposed and final packages." [Editor's note: Article includes a flow chart and checklists for identifying fiduciaries and the applicability of various provisions, and a 9-page chart comparing the 2015 DOL proposal to the final package.] (Ropes & Gray LLP)
[Guidance Overview] First Look at DOL's Final Fiduciary Rule
"When does the Fiduciary Rule go into effect? ... How does the final Fiduciary Rule change the definition of 'fiduciary' under ERISA? ... Does the final Fiduciary Rule include carve-outs or other exceptions from fiduciary status? ... What is the consequence of becoming a fiduciary? ... What are the conditions of BICE? ... How does the final Fiduciary Rule affect other common class exemptions?" (Mayer Brown)
[Guidance Overview] DOL Issues Final Fiduciary Rule
"Changes [from the proposed rule] include: [1] Clarifying when a person has made a recommendation. [2] Clarifying when a person qualifies as a fiduciary. [3] Deleting appraisals from the final rule. [4] Clarifying information that constitutes investment education. [5] Adding a provision on general communications. [6] Substantially modifying the seller's exception." (Practical Law Company)
[Guidance Overview] DOL's Final Fiduciary Rule: 'Hire Me' (PDF)
"[T]he Final Regulation clearly provides that one does not become a fiduciary merely by marketing oneself or an affiliate as a potential advice fiduciary, unless that recommendation is coupled with an investment recommendation. Thus, a fee-based adviser can freely 'recommend' his or her services. However, this may be a pyrrhic victory because the vast majority of such 'hire me' recommendations are likely to be made in conjunction with an investment recommendation.... [T]he streamlined BIC Exemption may not provide relief for recommending a rollover into an arrangement if the program's fees are levelized only at the firm level and not across the entire organization.... [A]bsent 100% level fees, recommending a rollover from one IRA to another will likely require a written contract and compliance with the full BIC Exemption." (Groom Law Group)
[Opinion] New Fiduciary Rule: What the DOL Got Right, Came Close On, and Missed Entirely
"In many ways, the DOL put practical implementation ahead of any abstract legal theory, making the Rule more sustainable when the rubber meets the road.... By providing templates, interpretations, and model language, the DOL can improve the likelihood the Fiduciary Rule with perform as intended.... Ultimately, the risk here is without clearer guidelines from the DOL, interpretation may be left to the courts ... it's not just any particular specific within the Rule that could be wrong, but the rulemaking process itself.... The fact this new Rule exceeds one thousand pages suggests it may be too cumbersome. If a regulation's length makes it unwieldly, how can it ever be fully -- and faithfully -- implemented." (Fiduciary News)
[Guidance Overview] Final Fiduciary Regs Pack Less Than Hurricane-Force Punch
"[T]he final rule and accompanying [PTEs] ... appear to be less disruptive and destructive than many thought they would be, compared to the 2015 proposed rule and exemptions.... In those cases where a signed BIC document must be executed, such as in an IRA rollover situation, contract execution can be part of an account opening process, rather than before the very first syllable of an advising communication! ... Also, the need for initial one, five and 10-year projections, and annual disclosures, were removed as BIC requirements, significantly reducing the administrative and record-retention burden of the BIC as initially proposed.... Health Savings Accounts (HSAs) and Coverdell Education Savings Accounts (ESAs) are covered by this guidance to the same extent that IRAs are." (Todd Berghuis, for Ascensus)
[Guidance Overview] New DOL Conflicted-Advice Regulation -- from a Plan Sponsor Viewpoint
"[An] employer has an affirmative duty to understand the nature of its relationships with all of the plan's service providers ... If the advisor has not been acting as a fiduciary, develop a timeline for when and how the advisor will transition its services to a fiduciary investment advisor model. A change in an existing advisor relationship to an investment fiduciary-based model may require more than just receiving and reviewing new account documents and disclosure statements. In many cases, in order for the advisor to meet the impartial conduct standards, more substantive changes, such as transitioning from a commission-based to a fee-based arrangement, will be necessary." (RSM US)
Fiduciary Opponents to DOL: See You in Court?
"Now that the final rule is out, insiders are even more convinced that lawsuits are on the way.... Jack Marrion, CEO of the consulting firm Advantage Compendium, is confident the rule will never go into effect. 'I sincerely believe the final outcome is that ... the entire rule will be stayed and returned to the DOL to redo their economic analysis -- which they are unlikely to do in the next administration,' Marrion said. 'So I think it will die before it goes into effect.' ... To date, the most litigious rumblings have come from the offices of the U.S. Chamber of Commerce." (
[Opinion] The DOL Rule: A Milestone for the Profession
"[T]he new rule fundamentally (and with pretty zero exception) requires the broker or independent BD rep to act as a fiduciary. That brings a lot of people into the principles-based universe, which is alien territory for the brokerage firms. They'll all have to set up subsidiaries that function as fee-compensated RIAs in order to keep working with qualified plan money.... Most importantly, the DOL rule writers seem to have been very careful to make sure that Wall Street firms and sales agents cannot disclose away, disclaim away or have their customers contractually sign away fiduciary responsibility." (Bob Veres in Inside Information)
[Guidance Overview] Game Changer, Revisited: The Final Conflict of Interest Rules (PDF)
15 pages. "[C]ertain key ramifications suggest themselves. [1] Forced conversion to fiduciary status ... [2] The 'ERISA-fication' of IRAs ... [3] A new paradigm for rollovers ... [4] Migration to fee-based service ... [5]New Compliance Infrastructure." (Pentegra Retirement Services)
[Guidance Overview] DOL Issues Final Fiduciary Rule
"[The DOL] has adopted a 'phased' implementation approach for the Best Interest Contract Exemption and the Principal Transactions Exemption.... During this transition period, firms and advisers must adhere to the impartial conduct standards, provide a notice to retirement investors that, among other things, acknowledges their fiduciary status and describes their material conflicts of interest, and designate a person responsible for addressing material conflicts of interest and monitoring advisers' adherence to the impartial conduct standards. Full compliance with the exemptions will be required as of January 1, 2018." (Littler)
[Opinion] Vanguard's Perspective on the DOL's Final Rule on Fiduciary Advice
"[Vanguard's head of ERISA & Fiduciary Services, John Schadl,] said the rule is more aligned with existing [FINRA] standards for what constitutes a recommendation, although the DOL could have done more to harmonize these standards.... However, Mr. Schadl cautioned that these positive developments don't mean that implementation of the new standards will be easy or resolve all concerns about the workability of the rule." (Vanguard)

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