How to Transition from 401(k) ‘C’ to Fee

How to smooth the transition in 401(k) advisor compensation?
How to smooth the transition in 401(k) advisor compensation?

Will the 401(k) to IRA rollover tsunami ever reach shore, or will the DOL’s fiduciary breakwater slow it to a trickle?

401(k) platform provider PCS is clearly banking on the former. It’s introduced an advisor-initiated rollover system that it says is fully compliant with the Conflict of Interest rule.

As the company notes, the looming April, 2017 implementation date of the rule has advisors and home offices scrambling for solutions, with about $4 Trillion in commission-based IRA accounts that will have to be rolled into new, compliant structures.

“Every retirement-plan enterprise will have to reassess its procedures,” PCS CEO Mark Klein, a self-described recovering ERISA attorney, said in a statement. “Advisors, home offices, plan sponsors are all feeling the pressure.

Of the $7.3 trillion currently in IRAs, $4 trillion is in commission-based accounts. Klein anticipates that most of the accounts will transition to level fee arrangements. Whether handled by independent RIAs, advisors registered with broker/dealers, or hybrid advisors, “every account will have to be reviewed and converted in accordance with the DOL mandates, as necessary.”

Using the PCS tool, advisors “can quickly and easily create a seamless journey for capturing rollovers out of qualified plans and transitioning existing IRAs from “C” (commissions) to Fee; ensuring DOL compliance,” it claims.

In addition to serving ongoing clients, advisors can initiate the rollover tool via text or email with “off the street” IRA holders, providing a low-cost investment solution, easy set-up and paperless account forms and disclosures.

“Since PCS was founded in 2001, our express purpose has been to offer advisors a conflict-free, full-fee-disclosure, no-hidden-agenda retirement platform,” Klein concluded. “With the anticipated cost and liability ramifications of the DOL regulations, we are providing advisors with a comprehensive rollover tool enabling them to remain compliant by quickly addressing the DOL level fee fiduciary requirements.”

John Sullivan
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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.

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