Category: Uncategorized


Interesting Angles on the DOL’s Fiduciary Rule #97

Posted on July 10, 2018, by Fred Reish in DOL Activity, fiduciary, prudent, Registered Investment Advisers, RIA, SEC, Uncategorized. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #97

Regulation Best Interest Recommendations by Broker-Dealers: Part 3

This is my 97th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and the SEC’s “best interest” proposals.

In my last two articles—Part 1 and Part 2 on this topic, I discussed the fact that proposed Reg BI and its best interest standard of care for broker-dealers did not apply to all of the recommendations made by broker-dealers. The proposed best interest standard for broker-dealers will apply only to securities transactions recommended to “retail customers.” (Reg BI defines a “retail customer” as “a person, or the legal representative of such person, who . . . uses the recommendation primarily for personal, family, or household purposes.”) I compared that to the SEC’s Interpretation for RIAs, which applies to all advice to all clients. This article gives examples of how the proposals … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #94

Posted on June 11, 2018, by Fred Reish in Broker-Dealers, DOL Activity, fiduciary, FINRA, Registered Investment Advisers, RIA, SEC, Uncategorized. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #94

SEC Proposed Reg BI and Recommendations of Rollovers (Part 3)

This is my 94th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions and the SEC’s “best interest” proposals.

Part 1 of this series discussed the provisions in the SEC’s proposed Regulation Best Interest that would impose a best interest standard of care for rollover recommendations by broker-dealers and their registered representatives. (More specifically, the standard applies if the rollover recommendation involves securities transactions—which would ordinarily be the case for participant-directed plans.) Part 2 described some of the considerations for developing a best interest recommendation process.

This article—Part 3—describes the proposed requirement to “mitigate” the conflict of interest inherent in a rollover recommendation.

Since a broker-dealer and its representative would not, in most cases, receive any compensation if a participant does not roll over, there is, to use the … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #83

Posted on March 15, 2018, by Fred Reish in DOL Activity, prohibited transaction, SEC, Uncategorized. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #83

Part 2 of Undisclosed (and Disclosed) 12b-1 Fees

This is my 83rd article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

In last week’s post (Angles #82) I discussed the fiduciary and prohibited transaction rules that should be considered in light of the SEC’s “Share Class Selection Disclosure Initiative” (“SCSDI”). As a refresher, the SCSD Initiative is a self-correction and self-reporting program where RIAs can identify, correct and report failures to adequately disclose the receipt of 12b-1 fees in addition to their advisory fees. My article discussed the consequences under the DOL’s guidance for the receipt of 12b-1 fees—on top of advisory fees—for both non-discretionary investment advice and discretionary investment management, where the results are quite different.

This article … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #78

Posted on January 24, 2018, by Fred Reish in Broker-Dealers, DOL Activity, fiduciary, prohibited transaction, Registered Investment Advisers, RIA, Uncategorized. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #78

The Fiduciary Rule: Mistaken Beliefs (#3)

This is my 78th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

The fiduciary regulation has been in effect since June of last year — a period of over six months. As you might expect, we are seeing mistakes and misunderstandings about activities that can result in fiduciary status for advisors. This article covers one of those.

The myth for this Angles is that broker-dealers and RIAs, and their advisors, must only recommend the lowest cost investments, for example, mutual funds with the lowest expense ratios. That is not correct.

In fact, the DOL has explained that:

“Consistent with the Department’s prior interpretations of this standard [the reasonable compensation standard], the Department … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #77

Posted on January 16, 2018, by Fred Reish in BICE, DOL Activity, fiduciary, prudent, Uncategorized. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #77

The Fiduciary Rule: Mistaken Beliefs (#2)

This is my 77th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

The DOL’s fiduciary regulation and the transition Best Interest Contract Exemption (BICE) first applied on June 9, 2017. In other words, the recommendations made by broker-dealers and RIAs, and their representatives, have been governed by those rules for more than six months. While the requirements of the fiduciary standard of care and transition BICE are fairly straightforward—at least for advisors who understand the fiduciary concept, I am hearing about misunderstandings of those requirements. Angles #75 was my first post about mistaken beliefs; this article continues that theme by examining whether the best interest standard mandates the selection of the … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #68

Posted on November 2, 2017, by Fred Reish in Broker-Dealers, DOL Activity, fiduciary, prudent, Registered Investment Advisers, RIA, SEC, Uncategorized. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #68

Recommendations of Distributions: The SEC Joins the Fray

This is my 68th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

In 2013, FINRA put its stake in the ground on recommendations of distributions and rollovers when it issued Regulatory Notice 13-45. The DOL has, with the development of its fiduciary regulation over the past few years—which became applicable on June 9 of this year—taken a similar, but more demanding position. However, the DOL’s guidance has more teeth than FINRA’s, because it is backed by a standard of care—the prudent man rule and duty of loyalty—and by the prohibited transaction rules in ERISA and the Internal Revenue Code. Recently, the SEC has joined the fray with the issuance … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #64

Posted on October 5, 2017, by Fred Reish in BICE, DOL Activity, fiduciary, prudent, Uncategorized. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #64

What Does the Best Interest Standard of Care Require?

This is my 64th article about interesting observations concerning the Department of Labor’s fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

The best interest standard of care is found, among other places, in the Best Interest Contract Exemption (BICE). The standard is a combination of ERISA’s prudent man rule and duty of loyalty. In fact, in the prudence portion of the definition, the only change is that the words “prudent man” are changed to “prudent person.” But, that begs the question, what does the prudent person rule require?

Generally speaking, it requires the following:

A prudent process by a hypothetical knowledgeable person who obtains and evaluates the information needed to make a careful and skillful decision.
With regard to investments, … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #58

Posted on August 14, 2017, by Fred Reish in 408(b)(2), DOL Activity, fiduciary, Uncategorized. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #58

Recommendations to Contribute to a Plan or IRA

This is my 58th article about interesting observations concerning the Department of Labor’s fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

In Angles article #56, I discussed the DOL’s position that recommendations of contributions to plans and IRAs were fiduciary advice. However, a week after that article was posted on my blog, the DOL reversed its position. The new guidance is found in the DOL’s “Conflict of Interest FAQs (408b-2 Disclosure Transition Period, Recommendations to Increase Contributions and Plan Participation).”

In the newly issued FAQs, the DOL posed the following question:

Q2. Plans and their service providers often encourage plan participants to make contributions to the plan at levels that maximize the value of employer matching contributions or to … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #57

Posted on August 8, 2017, by Fred Reish in 408(b)(2), BICE, Broker-Dealers, DOL Activity, fiduciary, Uncategorized. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #57

DOL FAQs on 408(b)(2) Fiduciary Disclosures

This is my 57th article about interesting observations concerning the Department of Labor’s fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

The Department of Labor has issued a new set of “Conflict of Interest FAQs (408(b)(2) Disclosure Transition Period, Recommendations to Increase Contributions and Plan Participation).”

This article discusses the DOL’s relief from the 408(b)(2) requirement that a “change” notice be given for advisers who became fiduciaries to ERISA-governed retirement plans because of the June 9th expansion of the definition of fiduciary advice.

Before getting into the details of the relief, let’s look at what the DOL’s FAQs did not do. If an adviser (or his or her supervisory entity) was a fiduciary, functional or acknowledged, before June 9th, but did not give … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #42

Posted on April 13, 2017, by Fred Reish in Broker-Dealers, DOL Activity, fiduciary, prudent, Registered Investment Advisers, RIA, Uncategorized. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #42

Rollovers under the DOL’s Final Rule

This is my 42nd article about interesting observations concerning the Department of Labor’s fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

On April 7, 2017 the DOL issued its final regulation on the extension of the applicability date for the fiduciary definition and the related exemptions. This article discusses the impact of those changes on fiduciary status for recommendations to plan participants to take distributions and roll over to IRAs.

In its guidance, the DOL extended the applicability date of the new fiduciary definition from April 10 to June 9, but did not otherwise modify the definition. Since the fiduciary rule defined a recommendation to take a plan distribution as fiduciary advice, any recommendation to take a distribution and rollover to an … Read More »




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