Like the Kardashians, there’s simply no escaping it. After a constant stream of speculation in recent years over what it will be, how it will look, will it pass, etc., a fiduciary proposal from the Department of Labor is all but certain. And according to a new Fidelity survey, 53 percent of advisors say that their firms plan to wait until the DOL rule is finalized before undertaking any substantial action, which might not be the smartest course of action.
“Advisory firms are considering re-evaluating their service models, the products they recommend and the investors they serve in response to the pending DOL fiduciary rule,” Tom Corra, chief operating officer of Fidelity Clearing & Custody Solutions, said in a statement.
He adds that broker-dealers are especially concerned about what these changes will mean for their day-to-day business, and many registered investment advisors–who are already held to a fiduciary standard under the investment advisors act–are also seeing the rule as challenging, particularly its impact on their rollover and IRA business.
To help begin to at least consider what the new rule will mean for business and its impact on the firm, new Fidelity papers, Six Ways to Help Prepare for the Proposed DOL Investment Advice Rule and Capturing Opportunities Created by the Proposed DOL Investment Advice Rule, outline steps advisors can consider to begin preparing for the changes afoot:
- Develop a fact base for your existing retirement business: Understand the full scope of your firm’s retirement business.
- Review business practices and procedures: Consider carefully reviewing business practices and procedures in several key areas, including education, rollovers and referrals.
- Understand the potential financial impact of the proposed rules: Consider high- level scenario planning to better understand the potential revenue impact and technology and compliance costs to implement provisions of the rule.
- Explore potential new business models and segmentation strategies: The rule includes a number of approaches to compliance. Firms may consider different models for different segments of their clients and different types of advisors.
- Identify changes to infrastructure and support that are likely to be essential for rule implementation: Firms may look to invest in technology and/or additional talent to ensure compliance. Investing in improved workflow may also help reduce the rule’s new costs and time requirements.
- Consult with internal and external experts as you develop your plans: Given the complexity of the proposed rule, firms should engage legal, tax and compliance experts to help them fully understand its implications and ensure that their plans comply with the new regulations.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
