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DOL Fiduciary News: October 14, 2016

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DOL fiduciary rule will trim 401(k) advisers' stable of record keepers, asset managers: study

InvestmentNews; Oct 13, 2016 @ 11:48 am

Advisers to defined contribution plans will likely trim the number of record-keeping firms and asset managers they regularly use for DC business because of the Department of Labor fiduciary rule, mainly with an eye to cutting costs, according to a new study by Sway Research.

Forty percent of retirement/benefits consultants and 43% of retirement advisers believe the regulations will lead to a decline in the number of record keepers they use, according to the report, "The State of DCIO Distribution: 2017."

In addition, 26% of retirement/benefits consultants and 35% of retirement advisers believe the rules, which raise investment-advice standards in retirement accounts, will lead to a similar result among asset managers serving DC plans.

Analyst: Brace yourself for a BIG, post-DOL rule revenue dip; October 13, 2016

A new report from the global management consulting firm A.T. Kearney makes a jaw-dropping forecast: a precipitous, $20 billion dip in industry revenue resulting from the pending phase-in of the Department of Labor’s fiduciary rule.

The study, “Why investing will never be the same,” contains other provocative data points. Among them:

  • advisor-switching is accelerating, rising to 13 percent in 2015 from 4 percent after the 2007-2009 recession;
  • about 9 in 10 investors below age 45 say they would “change their advisory models” to pay less for advice. Among all age groups, nearly 3 in 4 (72 percent) would do so; and
  • 30 percent of older, “fully delegated” advised investors might opt for “lightly managed,” less costly advice.


What the heck is reasonable compensation anyway? 

MarketWatch; Published: Oct 12, 2016 1:00 p.m. ET

By Robert Powell

You might not be familiar with term “reasonable compensation” just yet. But come April 10 -- if not sooner -- you will be.

Why so? That’s when the Labor Department’s conflict-of-interest rule goes into effect. It’s the day when financial professionals who provide advice about the investments and insurance inside your IRA and 401(k) have to start acting in your best interest, as a fiduciary.

What’s more, it’s also the day when advisers can only charge reasonable fees or earn reasonable commissions when managing your retirement account.

How the new 'fiduciary' rule will actually affect you; October 12, 2016

A new rule is about to shake up your retirement accounts and the relationship you have with your advisor.

On April 10, 2017, the Department of Labor, the federal agency that oversees retirement plans, enables its so-called fiduciary regulation.

Starting on that date, broker-dealers and financial advisors will be required to provide advice that is in your best interest. It may seem surprising that wasn't always the case, yet the White House Council of Economic Advisers says conflicts of interest by investment advisors leads to $17 billion in lost income every year for most savers.

Lawsuits, DOL Rule Blur the Line between 403(b) And 401(k) Plans

Financial Advisor; October 13, 2016

Some advisors have assumed that most 403(b) plans offer them opportunities to capture retirement plan clients who may not fall under the U.S. Department of Labor’s sweeping new fiduciary regulations -- but a recent spate of lawsuits may challenge that assumption.

In August, ERISA class action lawsuits were filed against universities alleging that they had not met their fiduciary responsibilities to employees enrolled in 403(b) plans.

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