Insights


Interesting Angles on the DOL’s Fiduciary Rule #73

Posted on December 12, 2017, by Fred Reish in DOL Activity, Plan Sponsors, prudent, Recordkeeper. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #73

Recordkeeper Investment Support for Plan Sponsors

This is my 73rd 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 Angles article #70, I discussed three areas where the fiduciary rule is impacting recordkeepers. Those are: acceptance of fiduciary status; non-fiduciary investment services for advisors; and non-fiduciary investment services for plan sponsors. Angles articles #71 and #72 discussed the first two points. This article discusses the third.

In the past, recordkeepers often provided sample line-ups to start-up plans and to existing plans that were transferring to their recordkeeping platform. However, under the new fiduciary definition, a selective list of investments is considered to be fiduciary investment advice, which means that the recordkeeper would need to make prudent recommendations and … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #72

Posted on December 5, 2017, by Fred Reish in fiduciary, Plan Sponsors, prudent, Recordkeeper. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #72

Advice to Advisors: The “Wholesaler” Exception

This is my 72nd 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 my Angles post #70, I discussed three issues for recordkeepers related to the fiduciary rule and exemptions. Angles #71 discussed the financial wellness programs developed by some recordkeepers. This article covers investment advice to advisors.

It is common knowledge that the recommendation of investments to a plan sponsor (that is, to a plan fiduciary such as a 401(k) committee) is fiduciary advice. However, it is less known that, under the new rules, investment recommendations made to fiduciary advisors is also considered fiduciary advice. And, since virtually every advisor to a plan, participant or IRA is now a fiduciary, that … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #71

Posted on November 29, 2017, by Fred Reish in BICE, DOL Activity, fiduciary, Recordkeeper. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #71

Recordkeepers and Financial Wellness Programs

This is my 71st 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 my last post, Angles #70, I highlighted the three types of work that we are doing for recordkeepers as a result of the DOL’s fiduciary regulation and exemptions. This post goes into more detail about the development of financial wellness programs and the acceptance by recordkeepers of fiduciary responsibility for some of the services.

As background, the goal of financial wellness programs is to provide help to participants in achieving their short-, intermediate-, and long-term financial objectives. Recordkeepers are uniquely suited to provide those services, because of the information they already possess and because of their call centers. The services most … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #70

Posted on November 15, 2017, by Fred Reish in BICE, DOL Activity, fiduciary, Plan Sponsors, prudent, Recordkeeper, Registered Investment Advisers, RIA. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #70

The Fiduciary Rule and Recordkeeper Services

This is my 70th 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.

Almost all of my Angles articles have been about the impact of the fiduciary rule on advisors—representatives of broker-dealers and RIAs. However, the fiduciary rule also affects recordkeepers and the services that they offer to plans and advisors. In that regard, most of the work that we are doing for recordkeepers falls into three categories:

Acceptance of fiduciary responsibility by recordkeepers for “financial wellness” of participants.
Providing investment services and support for advisors, without becoming a fiduciary.
Providing investment services and support for plan sponsors, without becoming a fiduciary.

The next few Angles articles will discuss these issues in detail. This article is … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #69

Posted on November 7, 2017, by Fred Reish in BICE, Broker-Dealers, DOL Activity, Registered Investment Advisers, RIA. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #69

Compensation Risks for Broker-Dealers and RIAs

This is my 69th 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.

While the Best Interest Contract Exemption (BICE) is greatly simplified during the transition period, there is more than meets the eye, and broker-dealers and RIAs need to consider whether their practices for compensating advisors encourage advice to retirement investors that may not be in the best interest of those investors. Certain compensation practices are more risky than others. This article discuss some of the arrangements that pose the greatest risks.

As background, transition BICE requires that broker-dealers and RIAs adhere to the Impartial Conduct Standards when making investment recommendations to plans, participants, and IRA owners . . . where there is … 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 #67

Posted on October 25, 2017, by Fred Reish in BICE, DOL Activity, fiduciary, prudent, SEC. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #67

Fiduciary Rule: From the DOL to the SEC

This is my 67th 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.

It now seems certain that the DOL will extend the applicability date of the final exemptions to July 1, 2019, or thereabouts. In any event, it will be a long extension. As a practical matter, that means that the transition rules under the Best Interest Contract Exemption (BICE) and Prohibited Transaction Exemption 84-24 will be extended until June 30, 2019 . . . in other words, the transition rules will continue until the applicability of revised final exemptions.

The extended time will be used for the DOL and the Securities and Exchange Commission (SEC) to cooperate in the … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #66

Posted on October 18, 2017, by Fred Reish in 408(b)(2), Broker-Dealers, fiduciary, prudent, Registered Investment Advisers, RIA, Service Providers. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #66

Concerns About 408(b)(2) Disclosures

This is my 66th 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.

Because of the change in the definition of fiduciary advice (which applied on June 9, 2017), all advisors to retirement plans need to review their prior 408(b)(2) disclosures to see if changes are necessary. That particularly applies to broker-dealers and life insurance brokers and agents.

The first level of review should be to determine whether their prior 408(b)(2) disclosures to ERISA retirement plans affirmatively stated that they were not fiduciaries to the plans that they served. If so, those broker-dealers, insurance brokers and agents need to send out new 408(b)(2) disclosures that affirmatively disclose their new-found fiduciary status (assuming that their advisors … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #65

Posted on October 11, 2017, by Fred Reish in BICE, DOL Activity, fiduciary, prohibited transaction, prudent. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #65

Unexpected Consequences of Fiduciary Rule

This is my 65th 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 fiduciary and best interest standards of care, as well as the prohibited transaction rules, will impact advisors in some unexpected ways. That is particularly true of investment advice to IRAs. Here is an example.

When plan or IRA assets are held by a custodian, an advisor often has the ability to recommend either transaction-fee (TF) mutual funds or no-transaction fee (NTF) mutual funds. The recommendation of either TF or NTF funds is a fiduciary act for plan assets, and it will be a best interest act for IRA assets—if the advisor or his or her firm receives any payments beyond a … 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 »






Recent Insights

Interesting Angles on the DOL’s Fiduciary Rule #73

Recordkeeper Investment Support for Plan Sponsors

This is my 73rd article about interesting observations concerning the Department of Labor’s (DOL’) fiduciary rule and exemptions. These...

Interesting Angles on the DOL’s Fiduciary Rule #72

Advice to Advisors: The “Wholesaler” Exception

This is my 72nd article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These...

Interesting Angles on the DOL’s Fiduciary Rule #71

Recordkeepers and Financial Wellness Programs

This is my 71st article about interesting observations concerning the Department of Labor’s fiduciary rule and exemptions. These articles also...