Compliance
Getting In Shape For Fiduciary Rule With New Checklist
The latest developments in and around North America's wealth management sector.
RiXtrema, a US firm
providing risk management tools to firms such as Registered
Investment Advisors, has come up with a checklist guide for
advisors wrestling with the sweeping changes to how they do
business under the Department of Labor’s new fiduciary rule.
The rule, among other features, requires advisors to serve the
“best interests” of clients, which in practical form has been
taken to mean charging them for advice rather than taking a trail
commission fee on products and services sold. The idea is to
ensure clients receive advice that actually suits their needs,
avoiding potential mis-selling and losses down the
line.
“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,” explained RiXtrema President Daniel
Satchkov.
“It’s essential that advisors understand this and take necessary
action to comply with the rule,” he said.
RiXtrema’s DOL Fiduciary Rule 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
The new rule states that any rollover (whether level fee or not)
is considered to be a “prohibited transaction,” thus any advisor
who on-boards Individual Retirement Arrangement assets, since the
promulgation of the rule on June 9, 2017, must document why the
rollover is in the best interest of the investor. (An IRA
rollover is a transfer of funds from a retirement account into a
traditional IRA or a Roth IRA.)
RiXtrema, like some of its peers, has been promoting specific services to tap into demand caused by the DOL's rule, such as here.
After a period of delays - caused in part by last November's presidential elections, the rule is now in force. To see an article examining the landscape it is helping to bring into being, see here.