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DOL Fiduciary News: October 2, 2017

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Clean shares will play starring role in the future of investment advice

BenefitsPro.com; Sept. 29, 2017

Clean shares of mutual funds are expected to revolutionize how brokers and advisors are compensated for investment advice, irrespective of how the Labor Department uses the products to revise the fiduciary rule, according to experts at Morningstar.

The Labor Department has strongly signaled its interest in using clean shares to create a new exemption under the fiduciary rule.

Clean shares strip 12b-1 distribution fees, which are paid to advisors and brokers when recommending investments, from the cost of mutual funds.

Because different funds come with different payment levels, advisors and brokers face a potential conflict of interest by recommending funds with higher distribution payments that might not be in investors’ best interest.
(http://www.benefitspro.com/2017/09/29/clean-shares-will-play-starring-role-in-the-future)

DOL fiduciary rule: Challenges for RIAs under the BICE

InvestmentNews; September 29, 2017 @ 3:53 pm

On Aug. 31, the Department of Labor proposed to extend the applicability date for the full best-interest contract exemption to July 1, 2019. In all likelihood, that proposal will be finalized before the end of the year.

With that in mind, what is the current state of the DOL fiduciary rule? How does it apply to registered investment advisers? And, what are the primary challenges for RIAs under the rules now in effect?

The final fiduciary regulation, which became applicable June 9, already applies to investment advice to retirement plans and participants. And, if investment advice to an IRA results in compensation to the RIA firm or adviser that's prohibited (any compensation resulting from fiduciary advice or paid by a third party, like a commission or 12b-1 fee), an exemption is needed to allow for that compensation. Most likely, that exemption will be the "transition" version of BICE.
(http://www.investmentnews.com)