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DOL Fiduciary News: November 27, 2017

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Clarifying difference between advice, sales not as simple as it sounds

InvestmentNews; Nov 25, 2017 @ 6:00 am

The long battle over investment advice standards can be traced to the different standards that apply when a broker sells a product to a client and then helps the same client manage his finances.

The fiduciary rule that applies to investment advisers, which requires that they act in the best interests of their clients, doesn't govern brokers when they offer advice that is "solely incidental to" product transactions, but theoretically would apply when they offered more extensive planning advice.

Over the years, brokers have been marketing themselves as financial advisers, but the Securities and Exchange Commission has looked the other way when it comes to making sure they are adhering to a best-interest standard, according to fiduciary advocates.

Now the SEC is drafting a fiduciary rule for retail investment accounts in an effort to catch up with the Labor Department's fiduciary rule for retirement accounts; simply enforcing existing rules is not a silver bullet.

DOL fiduciary rule limiting DCIO support to plan advisers in unexpected ways

InvestmentNews; Nov 21, 2017 @ 5:20 pm

The Department of Labor fiduciary rule is pushing more 401(k) plan advisers to a fee-based model, but that shift is leading to an unexpected consequence: dark data.

Asset managers, also known as defined contribution investment-only providers, are unable to track payments to advisers because of this shift, and many of these fee-based plan advisers are finding it more difficult to get traditional support from DCIOs as a result.

Advisers have come to rely on provider support, especially from DCIOs, to run their practice. That includes running investment due-diligence reports, fee benchmarking and marketing efforts such as plan sponsor educational programs. The level of support often depends on how much business an adviser gives an asset manager.

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