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DOL Fiduciary News: October 4, 2016

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Outsourced 401(k) fiduciary services emerge after DOL rule

InvestmentNews; Oct 3, 2016 @ 1:53 pm

With the Labor Department's fiduciary rule upping the ante for many 401(k) advisers and their broker-dealers, providers from around the retirement market are looking at ways to defray fiduciary responsibility, and in some cases, possibly replace the adviser altogether.

Many industry observers expect that the Department of Labor rule, which raises standards for providing investment advice in retirement accounts, will cause broker-dealers to choose one of three options: severely restrict the number of advisers who can service 401(k) plans, exit the 401(k) market entirely, or seek out ways to mitigate risk by outsourcing.

These actions would largely affect small 401(k) plans, many of which are serviced today by brokers working in a non-fiduciary capacity.

Report: DOL Rule Could Freeze IRA Rollovers

InsuranceNewsNet; October 3, 2016

Nearly half of projected individual retirement account (IRA) rollover assets are “at-risk” of remaining in the defined contribution plan-sponsor market once the Department of Labor’s fiduciary rule goes into effect, a new report claims.

Assets that don’t roll over into retail IRA accounts, a transaction considered a big cross-selling opportunity for retirement advisors, would cut into revenues generated by financial advisors since fewer dollars are “in motion.”

5 Big Changes Advisors Should Make by Fiduciary Rule Deadline: AssetMark

ThinkAdvisor; October 2, 2016

It’s getting to be crunch time for advisors to ensure compliance with the DOL fiduciary rule. By April 10, 2017, advisory firms must adhere to what the DOL describes as “impartial conduct standards,” acting in the best interests of the client.

They’ll need to notify all retirement investors of their fiduciary status, describe any material conflicts of interest, and designate someone to be responsible for addressing material conflicts of interest and monitoring adherence to the new rule. Exemptions from best interest standards will be available through the use of Best Interest Contract Exemption (BICE) or principal transaction exemptions and can be phased in up until Jan. 1, 2018, when full compliance is required.

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