BISA Magazine - Quarter 3, 2016 - 29

According to the DOL fiduciary rule, fiduciary status extends to advice given, and there is no expectation of ongoing monitoring of a recommendation. However, the DOL has added a caveat that there is an expectation of continued monitoring of recommendations of products that are complex and/or illiquid in nature. The final rule does not specifically identify these products (although some products were listed in the 2015 proposal), so it is up to firms to determine the products that require continued monitoring. DOL Fiduciary Rule The new DOL fiduciary rule is over 1,000 pages when printed. This article has only described some basic concepts about areas that affect financial institutions that work with ERISA plans and IRA accounts for transaction-based compensation. The rule has many more intricacies that advisors and institutions will need to understand. In addition to brokers and insurance professionals, the rule will impact investment advisors, product distributors, product manufacturers and any other financial institution that deals with ERISA plans and IRA accounts. Rule Compliance Dates The rule has two dates for compliance. By the first date, April 10, 2017, financial institutions must comply with the rule, but they are not required to have all documents, disclosures and procedures in place. This is akin to a "soft" opening of a retail store, wherein the kinks can be ironed out before the "Grand Opening." However, all rule requirements must be met by Jan. 1, 2018. The question is, what should firms do now? Some firms are waiting for the results of lawsuits against the DOL fiduciary rule. However, the DOL has long stated that they are wellpositioned to withstand these lawsuits. Other firms are waiting for Congress to act, but Congress already proposed legislation that was vetoed by President Obama. Still other firms are waiting for the results of the 2016 U.S. presidential election. Waiting for such events to occur may prevent a firm from complying with the rule by its compliance dates. The Time to Start Preparing Is Now We advise firms to accept that the DOL fiduciary rule is a reality, and thus begin the process for compliance. Firms that don't start now will find that the first compliance date of April 10, 2017, has arrived and they are not ready to comply. Some steps financial institutions can take now to prepare include: * taking an inventory of retirement plans and accounts to assess the impact of the rule on the firm's business; * determining, based on this inventory, the best course of action to comply with the rule. For example, firms may consider setting minimum account balances in order to maintain a relationship, implement a fee-based model for retirement accounts, and/or adopt the BIC Exemption for retirement accounts; * conducting an assessment of the rule's impact on other non-sales functions; * adopting written procedures to address the activities the firm decides to implement; and * preparing an implementation plan to guide this process. Financial institutions should also seek assistance to understand the full scope of the rule and prepare for compliance. The rule is complex and nuanced, so firms should consult with ERISA and DOL fiduciary rule specialists to assess the full impact on their firm and the steps required for compliance. Regulatory change is not new to the financial industry. As in the past, the firms that embrace these changes and prepare to comply with them will be the firms that succeed in the new regulatory environment. For more information about ACA Compliance Group please contact Dee Stafford at dstafford@acacompliancegroup. com or 310-322-8840. 29 BISA Magazine

Table of Contents for the Digital Edition of BISA Magazine - Quarter 3, 2016

Table of Contents
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BISA Magazine - Quarter 3, 2016 - Table of Contents
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BISA Magazine - Quarter 3, 2016 - Cover3
BISA Magazine - Quarter 3, 2016 - Cover4
https://www.nxtbook.com/nxtbooks/bisa/2017q4
https://www.nxtbook.com/nxtbooks/bisa/2017q3
https://www.nxtbook.com/nxtbooks/bisa/2017q2
https://www.nxtbook.com/nxtbooks/bisa/2017q1
https://www.nxtbook.com/nxtbooks/bisa/2016q4
https://www.nxtbook.com/nxtbooks/bisa/2016q3
https://www.nxtbook.com/nxtbooks/bisa/2016q2
https://www.nxtbook.com/nxtbooks/bisa/2016q1
https://www.nxtbook.com/nxtbooks/bisa/2015q4
https://www.nxtbook.com/nxtbooks/bisa/2015q3
https://www.nxtbook.com/nxtbooks/bisa/2015q2
https://www.nxtbook.com/nxtbooks/bisa/2015q1
https://www.nxtbook.com/nxtbooks/bisa/2014q4
https://www.nxtbook.com/nxtbooks/bisa/2014q3
https://www.nxtbook.com/nxtbooks/bisa/2014q2
https://www.nxtbook.com/nxtbooks/bisa/2014q1
https://www.nxtbookmedia.com