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DOL Fiduciary News: October 18, 2017

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Morgan Stanley sees slower fee-based asset flows on fiduciary rule delay

InvestmentNews; October 17, 2017 @ 2:00 pm

Morgan Stanley Wealth Management continues to see assets surge into fee-based accounts, but that flow began slowing noticeably in the third quarter, following more certainty of a delay in the implementation of major parts of the Department of Labor's fiduciary rule.

Flows to fee-based accounts set a year-to-date record in Q3, Morgan Stanley's chief financial officer, Jonathan Pruzan, said Tuesday morning on a quarterly earnings call.

These types of accounts, also known as advisory accounts, assess a level fee based on assets under management, as opposed to a transactional fee, such as a commission, in brokerage accounts.

Fostering a Culture of Compliance for the DOL Fiduciary Rule; Oct 16, 2017

After numerous delays, updates and court decisions, the future of the Department of Labor’s Fiduciary Rule remains uncertain. While regulators still have not offered a clear picture of what to expect, advisory firms are using this time to examine their processes and payment structures to ensure they will be prepared to comply.

This move from a suitability standard to a fiduciary standard represents a seismic shift for many advisory firms and broker/dealers in their approach to compliance. More than half of registered investment advisor say the rule will increase the amount of time spent on compliance, according to a 2016 Fidelity survey.

Under this new regulatory environment, compliance can be something of a moving target—firms are stuck trying to adhere to rules that aren’t yet being enforced and may well change. In this new reality, reacting to new standards doesn’t go far enough. Advisory firms must focus on developing a proactive risk mitigation strategy.

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