FINRA released its 2018 Annual Regulatory and Examination Priorities Letter (Priorities Letter) on January 8, 2018. While FINRA advises that it can change its priorities in response to circumstances, the purpose of the Priorities Letter is to permit broker-dealers to plan their compliance, supervisory and risk management programs and to prepare for FINRA examinations. Therefore, this Priorities Letter is significant both in what it says and in what it has chosen not to say including failing to discuss FINRA’s views regarding a “fiduciary standard.”
Continue reading “FINRA 2018 Annual Regulatory and Examination Priorities Letter Makes No Mention of a Fiduciary Duty for Brokers”
MYTH: “Advisors must recommend the lowest cost investment.”
This post discusses what broker-dealers and their advisors need to do to manage the risks in providing investment recommendations to plans and IRAs. In order to manage those risks, though, broker-dealers and advisors need to understand what the rules require. To do that, we need to debunk some “myths” about the rules. Continue reading “Fiduciary Rule Myths”
This is Part 2 of our post on important issues for broker-dealers during the extended transition period for the fiduciary exemptions. In Part 1, we discussed the need to develop written supervisory procedures under the Best Interest Contract Exemption (BICE) and the importance of engaging in – and being able to demonstrate – diligent and good faith efforts to comply with the exemptions.
Two other important issues are how to demonstrate compliance with the transition exemptions and the protections that are not afforded by the non-enforcement policy.
Continue reading “The Delay of the Fiduciary Exemptions: Now Is Not the Time to Relax (Part 2 of 2)”
Some broker-dealers may be tempted to view the DOL’s extension of the transition period for the fiduciary exemption to July 1, 2019, and the extension of the DOL and IRS non-enforcement policies, as an opportunity to relax and take a break from compliance issues for the next 18 months. Unfortunately, that could turn out to be a risky decision.
We are concerned that firms may not be paying sufficient attention to some of the most critical transition issues, including adoption of policies and procedures to ensure compliance with the Impartial Conduct Standards and taking affirmative steps to ensure diligent, good faith compliance with the rules.
Continue reading “The Delay of the Fiduciary Exemptions: Now Is Not the Time to Relax (Part 1 of 2)”
The Department of Labor (DOL) has extended the current transition period for the DOL Fiduciary Rule exemptions in order to reexamine the rule and its exemptions to see if changes are warranted and to coordinate with other regulatory agencies. This pushes the end date from January 1, 2018 to July 1, 2019.
The extension does not change the requirements of the Fiduciary Rule or the transition period exemptions currently in effect. However, there are certain provisions of the Best Interest Contract Exemption, the Principal Transaction Exemption, and amendments to Prohibited Transaction Exemption 84-24 that are deferred.
So, does the extension mean you can relax? The simple answer is no.
We published a client alert that details what the extension means for plan service providers, and some essential steps they should take in the year ahead. Click here to read the alert.
Broker-dealers have written supervisory policies (WSPs) that cover almost all aspects of their business. But more WSPs may be needed to address the DOL fiduciary rule.
While it may seem that no such requirement exists, the Department of Labor (DOL) has turned this around … if the firm intends to rely on the Best Interest Contract Exemption (BICE).
Continue reading “WSP’s Under the DOL Fiduciary Rule”
You may have already missed a required deadline for disclosure to your retirement plan clients … or not. In this post, we explore the requirement to update retirement plan disclosures to reflect changes in the information that was initially provided, including a change in fiduciary status under the new rules.
Continue reading “Required Disclosures After the DOL Fiduciary Rule”
When a financial advisor moves from one broker-dealer to another, both the firm and the advisor want his or her clients to come along. When those clients have IRAs, any recommendations to the IRA investors are now subject to greater scrutiny. This is because, under the DOL’s new fiduciary advice rule, a recommendation to move an IRA from another firm is a fiduciary recommendation. And while this would ordinarily be a prohibited transaction under the Internal Revenue Code – because the broker-dealer and advisor will make money if the account is transferred but won’t if it isn’t – there is an exemption that permits the recommendation and any resulting compensation, if a number of conditions are satisfied.
Continue reading “Fiduciary Rules for the Transfer of IRAs”