Action Plan for BDs & RIAs to implement the #DOLFiduciaryRule

Broker-Dealers and Registered Investment Advisor firms are in need of an action plan to implement the DOL Fiduciary Rule change. As any experienced compliance officer can tell you, planning ahead will be key in making a smooth transition to the new standard.  For this reason RND Resources put together a practical plan for small to mid-size BD and RIA firms to understand the DOL rule change and implement steps to meet the new compliance requirement.

The presentation will help BDs and RIAs to understand

• Which products are affected by the DOL Fiduciary Rule of April 2016
• Developing an action plan to get ahead of the DOL change before it is mandatory
• Ways to gain a competitive advantage by implementing the DOL rule change early
• The difference between Level Fee and Non-Level Fee transactions and how to transition commission based products
• Determining when to use Transactional BIC versus Contracted BIC exemptions, and more….

Action Plan for DOL Fiduciary Rule April 2016 from RND Resources Inc

If you’re starting a new BD or RIA, adopting the DOL Fiduciary standard is key to growing your business in the Senior and Retirement investor marketplace. Start out by setting up products and marketing material along with policies and procedures that drive advisers toward retirement related standards. This will help place your new firm ahead of established firms struggling to change.

RND Resources is a compliance consulting firm that assists new firms with formation and registration.  Our professional staff also works with established firms that need on-going compliance support. We are able to generate customized policy and procedure updates so firms can quickly adjust to changes in regulatory requirement and products. We also provide on-going compliance support and report filing services on a monthly, annual, or interim basis. Call us for more information about training staff and implementing policy for the DOL Fiduciary rule change.

Download company brochure

  RND Resources Inc | Los Angeles CA | 818.657.0288 | www.finracompliance.com

Dept of Labor Stepping Up to Fiduciary Responsibility for Retirement Advisers

February 2016 update -
Proposed rule:  Labor Department proposes to hold retirement investment advisers to a fiduciary standard, forcing them to avoid conflicts of interest that include sales based on commission and sales performance compensation.  

Assuming the rule is added to the law books, variable annuity issuers will likely find themselves shifting from paying out upfront commissions (around 8%) to returns on investor paid on-going fees. The rule would affect large insurance companies such as MetLife, Prudential, and Lincoln National; smaller brokerages and advisers are similarly impacted. Industry wide concerns are the entire variable annuity retirement savings sector will be thrown into flux for the first year. Sales of variable based annuities have been close to $140 billion per year recently. More than half of these sales are attributed to retirement savings accounts.

Experts indicate variable annuities with guaranteed lifetime benefits are extremely complicated products and should be sold with caution. In recent years, high commissions on variable annuity investments have pushed advisers and insurance agents to sell the products even where the annuity may not be best suited for the investor. The result - regulators are issuing consumer advisories and taking increased regulation under their wing.  

Members of the financial industry threaten legal challenge once the final rule is in place. The change is huge for the annuity industry and some sellers may avoid the products going forward because of lower upfront compensation. Many advisers believe upfront commissions should remain the standard for variable annuities because most of the adviser work is done in the beginning when establishing the account. Others cite, the restrictions create an imbalance and disservice to consumers who benefit from annuities; and that the industry is already highly regulated.

The proposed rule by the Department of Labor is designed to reduce conflicts of interest by requiring brokers working with retirement funds to act in the client’s best interest. Retirement vehicles with annual fees of 3-4% and a surrender charge of 7% (or more) is too often recommended as the best retirement vehicle; and often results is retirees who own high-fee products that erode retirement savings.  

With the proposed rule back on the table and likely to pass, brokers and insurance agents will be pressed to update conflict of interest policies and procedures.  FINRA focus on senior and vulnerable investors has increased over the past years. In 2016 FINRA plans to make treatment of senior investors a priority and urges firms to monitor investor accounts for red flags like; overly aggressive investments, unusual asset movements, and an unusual number of high cost products driving unsuitable recommendations.

April 2015 FINRA launched a Securities Helpline for Seniors (HELPS) and a toll-free number where senior investors can call and get assistance about their brokerage accounts or raise concerns. Armed with information from over 2500 calls, FINRA released an end of year report on effective practices brokers  and investors can take to establish a healthy working relationship that provides for the best interests of the investor as well as a suitable role for the broker.

Read the FINRA Securities Helpline for Seniors Report 2016

What do you think? Are these updates way overdue or right on time?

RND Resources Inc is a compliance and audit consulting firm serving broker-dealers, investment advisory firms, and fund managers.  We provide on-going compliance maintenance for firms as well as; #forensicanalysis, #mockaudits, #expertwitnesstestimony, suitability analysis, and custody compliance for securities regulated firms. Call #RNDResourcesInc for support (818) 657-0288 or visit our website at www.finracompliance.com