“How many of you are absolutely sick to death of hearing about the fiduciary rule?” Kimberly Shaw Elliott asked attendees of a Tuesday afternoon session at the annual Excel 401(k): The Advisors’ Conference in Las Vegas.
“It’s the gift that keeps on giving!” someone in the audience facetiously shouted.
All too true, discussion surrounding the rule is pretty grating at this point. And just when everyone thought the Fifth Circuit opinion that shot down the Department of Labor’s (DOL) latest regulatory definition of a fiduciary might put it all to rest, the DOL announced it’s back to the drawing board and aims to unveil a new set of regulations in September 2019.
Regardless of current or future changes, there are best practices that were prompted by the rule, but should have been on advisors’ must-do list all along.
That’s because they simply make sense, attested Shaw, newly appointed general counsel and chief compliance officer of Sheridan Road Financial.
For instance, the practice of outlining services provided by the advisor to the client in an itemized list is a critical element of fiduciary compliance that was heightened by the rule. But it’s a helpful practice period.
“It’s part of the fiduciary governance of educating that [retirement plan] committee as to why all of these things are important and being able to refer back to them and say, ‘Yes, these are the things you’ve engaged us for’ and demonstrate that value,” explained Keith Gredys, CEO of Kidder Advisers, who joined Shaw on stage.
The rule’s call for documentation regarding why decisions are made on behalf of clients, particularly if there’s a cost differential, is very important, too.
Shaw pointed out how the rule prompted many to create forms for this very purpose. The fact that the forms include the client’s consent is huge.
Plus, “if prepared appropriately,” she said, “it gives you almost a checklist for guiding your client through and having a really good, solid discussion of why this is in the best interest of your client.”
Jessa Claeys is a writer, editor and graphic designer.
