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DOL Fiduciary News: June 30, 2017


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A Fiduciary Rule on B-Ds Could Sow Confusion, Says Regulator

Financial Advisor; June 29, 2017

The SEC’s investor advocate has warned that if the agency’s commissioners impose a fiduciary duty on broker-dealers, it could harm investors in two ways.

First, the agency’s Rick Fleming said, such an obligation could lead to a weakening of the fiduciary standard for SEC-registered RIAs.

Second, instead of reducing confusion in the standard of care obligations of RIAs and broker-dealers, an imposed fiduciary duty could increase it.

“A poorly designed rule could cause even greater confusion by purporting to give investors the protection of a ‘fiduciary duty’ that would, in fact, be less stringent than the traditional fiduciary duty that applies in other relationships of trust,” Fleming said in a report issued Thursday that included his priorities for the coming SEC fiscal year starting October 1.

DOL Releases Fiduciary Rule Request for Information

ThinkAdvisor; June 29, 2017

The Department of Labor on Thursday published a Request for Information (RFI) regarding its fiduciary rule.

Information gleaned from comments “could form the basis of new exemptions or changes/revisions” to the fiduciary rule and its associated prohibited transaction exemptions, or PTEs, Labor said, as well as the possibility of extending the Jan. 1 applicability date of certain provisions in the Best Interest Contract Exemption, the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs, and Prohibited Transaction Exemption 84-24, which deals with annuities.

There is a 15-day comment period regarding extending the Jan. 1, 2018, applicability date of certain aspects, and a 30-day comment period on all other issues raised in the RFI.

Both begin upon publication of the RFI in an upcoming edition of the Federal Register.

The RFI, which had been under review at the Office of Management and Budget, asks for feedback on 18 questions.

Fintech sales take off after DOL fiduciary rule's partial implementation

InvestmentNews; June 29, 2017 @ 4:52 pm

Adviser demand for a technological answer to meeting new requirements of the DOL fiduciary rule has jumped in the three weeks since part of the retirement advice regulation was implemented.

Technology providers said interest in their fiduciary fintech had cooled following the election of President Donald J. Trump, who some speculated would scrap the best interest rule before its targeted April 10 implementation date. Instead, the Labor Department delayed it until June 9, when part of the rule went into effect while the agency continues to review the entire regulation.

"We've seen a tidal wave of interest since June 9," said Daniel Satchkov, president of RiXtrema, which sells a tool to help advisers compare costs of rolling funds out of 401(k) plans. "I think a lot of advisers were close to doing something for a while, but they kept waiting because of the delays coming from the DOL."

J.D. Power Financial Advisor Study Finds Attrition Risk Rising among Top Performers As New Regulation and Technology Create Uncertainty

COSTA MESA, Calif., June 29, 2017 /PRNewswire/

Financial advisors are less satisfied with their firms than they were last year and the decline is sharpest among the highest producers, according to the J.D. Power 2017 U.S. Financial Advisor Satisfaction StudySM, released today. A confluence of factors, including continuing changes to compensation, uncertainty over the Department of Labor Fiduciary Rule, emerging technologies like robo-advisors and waning faith in firm leadership are all contributing to the trend.

The study measures satisfaction among both employee advisors (those who are employed by an investment services firm) and independent advisors (those who are affiliated with a broker-dealer but operate independently) based on seven key factors (in alphabetical order): client support; compensation; firm leadership; operational support; problem resolution; professional development support; and technology support. Satisfaction is measured on a 1,000-point scale. Overall satisfaction averages 719 among employee advisors, down 3 points from 722 in 2016. Independent advisors average 752, down 3 points from 755 in 2016.

Plan advisors most exposed during fiduciary rule transition period; June 28, 2017

Advisors to defined contribution plans are carrying more liability than brokers and advisors in the retail space during the transition period for the Labor Department’s fiduciary rule, according to analysts at Broadridge Financial Solutions, which provides communication services for 21 of the 25 largest plan record-keepers.

“The reality is as a (plan) advisor, if you have a conflict related to either proprietary product, forms of compensation, or limitations of access to products that you offer your clients, you need to be affirmatively disclosing those conflicts to your client now,” said Andrew Besheer, a project leader for Broadridge’s DOL Fiduciary Rule Solutions program, during a webinar hosted by the firm.

Independent Advisors Stare at an Uncertain Future, Experts Say

InsuranceNewsNet; June 28, 2017

Fee-based registered financial advisors (RIA) and dually-registered advisors are rapidly pulling away from their commission-based independent representative peers with securities licenses, according to an industry consultant.

There are an estimated 100,000 independent reps and another 20,000 to 30,000 RIAs operating in the independent channel in the U.S. today.

“I would argue this industry is separating right now,” said Chip Roame, managing partner of Tiburon Advisors.

“I would say that the RIA portion of this business and the dually-registered portion of this business are booming, doing extraordinary well, assets are going up a lot,” he said.

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