Independent advisors may think they have little to worry about with the Department of Labor's upcoming fiduciary rule, but experts say taking no action leaves them in peril.

No fewer than "70% of RIAs think the DoL rule will have little impact on their business," says Tom Corra, the COO of Fidelity Clearing & Custody Solutions. "They should be verifying the accuracy of that statement so they don't get caught unprepared."

Indeed, nearly three-quarters of RIAs see "moderate or no impact to their business" as a result of the new DoL Investment Advice rule, according to a new survey from Fidelity Institutional.

Half the RIAs surveyed didn't think the proposed rule, expected to be released in March, would have a negative impact on their business, and only slightly more (55%) thought they would have to spend more time on compliance as a result of the new DoL investment advice  rule.

Some RIAs may indeed not be affected at all, Corra says. But, he cautions, all advisors should familiarize themselves with the rule's changes to ERISA, the law that allows the Labor Department to regulate certain kinds of retirement advice.


Even advisors who currently operate under the SEC-mandated fiduciary standard may find themselves required to adhere to a different — and potentially stricter — set of fiduciary standards for retirement accounts under ERISA, Corra explains.

Under the DoL proposal, advisors who receive any compensation for retirement products other than from the client, and/or advise clients on IRA rollovers or referrals will fall under ERISA, Corra warns.

"Even for advisors already operating as fiduciaries, it still makes sense to review your business models when it comes to rollovers and referrals," Corra says.

What can advisors do?

  • Develop a fact base for your existing retirement business.

      Understand the full scope of your firm’s retirement business, Fidelity suggests.

  • Review business practices and procedures.

Carefully review business practices and procedures in key areas such as education, rollovers and referrals.

  • Understand the potential financial impact of the proposed DoL rules.

Consider high-level scenario planning to better understand the potential revenue impact and technology and compliance costs to implement provisions of the rule.

  • Explore potential new business models and segmentation strategies.

The rule includes a number of approaches to compliance. Fidelity recommends that firms consider different models for different segments of their clients and different types of advisors.

  • Identify changes to infrastructure and support that are likely to be essential for rule implementation.

            Invest in technology and/or additional talent to ensure compliance. Investing in improved workflow may also help reduce the rule’s new costs and time requirements.

  • Consult with internal and external experts as you develop your plans.

Given the complexity of the proposed rule, Fidelity says firms should engage legal, tax and compliance experts to help them fully understand its implications and ensure that their plans comply with the new regulations.
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