The checklist is “complimentary and available for use by anyone.”
Once the advisor has completed the checklist and is clear as to the remaining obligations, he or she has the option of using RiXtrema’s IRAFiduciaryOptimizer to create best interest documentation that addresses the DOL Rule requirements.
The comparison highlights a variety of measures such as fees, track record of the investments, risk vs. risk tolerance, and best fiduciary practices. The tool then produces a report summarizing why a rollover is in the best interest of the client.
“Every advisor who advises on retirement account assets as of June 9, 2017, is effectively an ERISA fiduciary who must adhere to Impartial Conduct Standard and charge no more than a reasonable fee,” RiXtrema president Daniel Satchkov explained. “It’s essential that advisors understand this and take necessary action to comply with the rule.”
In addition to the requirements that ERISA fiduciary status implies, the DOL Rule also contains requirements for very specific documentation regarding investor’s best interest, the company noted.
“The Best Interest Document must follow DOL requirements and contain specific data points regarding both the retirement plan and the IRA account. These data points will show whether a rollover or IRA-to-IRA transfer is in the best interest of the investor.”
The checklist contains seven sections dealing with various requirements of DOL Fiduciary Rule best interest documentation. Each section contains detailed specific questions with references to legislation or DOL FAQ. By going through the Checklist advisors will know exactly where they might fall short and how to fix the problem.
The DOL Fiduciary Rule stipulates that any rollover (whether level fee or not) is considered to be a “prohibited transaction,” thus any advisor who onboards IRA assets, since the promulgation of the rule on June 9, 2017, is required to document why the rollover is in the best interest of the investor.
“We can’t state forcefully enough that advisors must be fully engaged in complying with the rule,” added Satchkov. “While there continues to be talk of delays in some areas of the rule, none concern the area addressed in the above DOL comment. Advisors who are not addressing this issue may incur liability due to ‘private right of action,’ which means that private parties can bring lawsuits as implied by the effective ERISA fiduciary status.”