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DOL Fiduciary News: November 16, 2017

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DOL Ready to Enforce Fiduciary Rule: Acosta; November 15, 2017

Labor Secretary Alexander Acosta told House lawmakers Wednesday that the best-interest standard under the Labor Department's fiduciary rule is “in effect,” and that as long as firms are “proceeding to implement” those standards, Labor is in a “compliance assistance” mode. However, if firms are committing “willful violations,” Labor will use its enforcement authority.

Rep. Robert Scott, D-Va., ranking member on the House Education and Workforce Committee, told Acosta during his Wednesday testimony before the committee that while the best-interest standard, also known as the Impartial Conduct Standards, are “now in effect,” as of June 9, “other parts of the rule are not."

He asked Acosta: "What would happen when a retiree has best interest violated — is essentially ripped off? What are the remedies?”

Acosta replied: “If companies are not proceeding in good faith [with the best-interest standard] we still have enforcement authority. So if there are willful violations, we do have enforcement authority.”

Scott probed further: “Does the individual have any individual remedy?”

“The enforcement authority within ERISA is a federal enforcement authority, not an individual enforcement authority,” Acosta responded.

CFP Board makes changes to proposed code of ethics, will seek more comments

InvestmentNews; Nov 15, 2017 @ 5:32 pm

The Certified Financial Planner Board of Standards Inc. has made changes to a revised code of ethics and standards for CFPs and will seek further comments before finalizing them, the group's chairman said on Wednesday.

Earlier this summer, the CFP Board released a draft update of its code of ethics and standards that would require all CFPs, including brokers who use the mark, to act in the best interests of their clients at all times when they are providing investment advice. The current standard holds CFPs to a fiduciary standard only during the financial planning process.

After reviewing the more than 1,300 comments, the board modified the proposal. The revised version will be released by the end of the year and open to another comment period from Jan. 2 through Feb. 2. The board expects to finalize the changes by the end of the first quarter next year.

In an appearance at Schwab IMPACT in Chicago, CFP Board Chairman Blaine Aikin declined to elaborate on what will be different about the new proposal.

Wells Fargo requires advisers to use level fees for new 401(k) business

InvestmentNews; Nov 14, 2017 @ 4:42 pm

Wells Fargo Advisors is requiring that financial advisers servicing 401(k) plans do so in a level-fee arrangement for new business, as have other large brokerage firms, in response to the Department of Labor's fiduciary rule.

"We have moved to consulting contracts for new business," a spokeswoman confirmed to InvestmentNews. "We feel this model allows for enhanced transparency around services and fees."

That means advisers servicing 401(k) plans going forward will do so as fiduciaries receiving a flat fee — a percentage of plan assets, for example — for acting in clients' best interests.

Prior to the fiduciary rule, which raises investment-advice standards in retirement accounts, firms such as Wells Fargo would only allow a select group of advisers, maybe only a few hundred, to service retirement plans as fiduciaries. The remainder with retirement plan business could do so as non-fiduciaries and receive commissions, or 12b-1 fees, as payment.

However, the fiduciary rule, which partially came into effect in June, ups the standard of care for 401(k) clients. Thus, large brokerages are increasingly forbidding their advisers from serving 401(k) plans in a non-fiduciary capacity in an attempt to reduce their legal liability.

SEC fiduciary rule threatened by political minefield

Financial Planning; November 14 2017, 9:10am EST

WASHINGTON -- As the SEC explores how to craft a fiduciary standard, it faces a political and legal minefield that could impede its efforts.

"Harmonization always sounds good, but there are many moving parts," Richard Roberts, a former SEC commissioner and principal at consulting firm Roberts, Raheb, & Gradler, told attendees at an Investment & Wealth Institute fiduciary conference. The institute was previously known as IMCA.

The regulatory landscape has changed dramatically since Trump's election. The Department of Labor proposed delaying implementing the fiduciary rule's best interest contract exemption by 18 months. The rule's other provisions are already in effect. Some state governments, meanwhile, are exploring whether to craft their own fiduciary standard.

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