New ‘Fiduciary’ Rule Unveiled by DOL

On April 6th 2016, the Department of Labor (DOL) unveiled the final version of the ‘Fiduciary’ rule at the Center for American Progress, a nonpartisan think tank in Washington, D.C.  The rule is expected to be the most disruptive piece of regulation since the Employee Retirement Income Security Act (ERISA) of 1974 and would change the definition of a “fiduciary” to expand the class of persons and entities that would be subject to strict fiduciary duties and prohibited transaction rules under ERISA and the Internal Revenue Code.

From a compliance perspective, the DOL has adopted a “phased” implementation approach for the Best Interest Contract and the Principal Transaction Exemptions starting in April 2017.  Full compliance with the rule will be required by January 1, 2018.  The potential impacts of the proposal are far reaching for broker dealers, RIAs and asset managers and will change how business is done/advice is provided for retirement brokerage accounts.

Under DOL’s proposed definition, any individual receiving compensation for providing advice that is individualized or specifically directed to a particular plan sponsor, plan participant, or IRA owner for consideration in making a retirement investment decision will now be a fiduciary.  The rule also includes additional exemptions that are designed to give brokers and insurance agents (and their firms) the ability to continue to earn transaction-based compensation when advising retirement clients, subject, however, to certain new restrictions.

Gartland & Mellina Group (GMG) has been following the DOL fiduciary rule for the past 2 years and is currently engaged with multiple clients to assess the impacts from a compliance, operations, technology and product perspective and overall design/implementation strategy.  GMG was recently quoted in the Wall Street Journal regarding its insights on the DOL Fiduciary Rule; link below:

GMG’s dedicated DOL team is reviewing the latest version of the rule and impacts to the financial services industry.  We welcome a conversation to better understand the challenges your organization is facing with respect to the rule and assess how we can assist.  Please feel free to contact us for further discussion or a request for our qualifications.

Gartland & Mellina Group — A Management Consulting Company