Department of Labor (DOL) Fiduciary Rule
Assessments and Compliance
The Department of Labor Fiduciary Rule (DOL Rule) expanded the “investment advice fiduciary” definition under the Employee Retirement Income Security Act of 1974 (ERISA) and modified certain prohibited transaction exemptions for investment activities in light of that expanded definition. The DOL has expanded the number of financial professionals who are deemed to be fiduciaries. It will impact across our industry, presenting challenges to many current business models. Above is a timeline showing he evolution of the DOL Fiduciary Rule.
What’s Happening Now
On February 15, 2018, the Massachusetts Securities Division filed an administrative complaint against a brokerage firm based on policies and procedures that were adopted in light of Department of Labor (DOL) Fiduciary Rule requirements. In its Complaint, the Division alleged that certain sales contests held in 2017 violated those policies and procedures and constituted unethical or dishonest conduct in violation of applicable state securities laws.
The Massachusetts enforcement case is significant and has attracted attention for a few reasons:
- It is the first enforcement action related to the DOL Fiduciary Rule.
- The action was filed despite DOL’s statement that enforcement of the DOL Fiduciary Rule would not be its priority with respect to firms that are making a good faith effort to comply.
- Some legal and industry experts have expressed concern as to whether the Division has properly exercised its state enforcement authority.
- It is part of a growing trend on the part of state regulators to address the fiduciary responsibilities of investment professionals who offer products and services to retail investors.
- Other state securities regulators may choose to initiate similar enforcement actions.
Expected Activity in 2018
While the Department of Labor continues its evaluation of the Fiduciary Rule, the expanded definition of fiduciary advice and the impartial conduct standards are in effect for qualified retirement accounts. Elsewhere, SEC Commissioner Clayton has acknowledged the need for SEC’s establishment of a consistent fiduciary standard and the SEC has issued a request for comments.
Your firm should assess its current business lines, investment offerings, compliance program and determine what changes will have to be made and how to best implement and monitor those changes. For some firms, compliance with the rule will tax firm resources. For others, implementation may mean making minor changes to policies and procedures. If your firm has limited capacity to manage the necessary assessments, implementation, and monitoring, Oyster can supplement your staff. We can help to manage and guide your project to successful completion.
How Oyster Can Help
Oyster Consulting has the knowledge and experience to support your efforts to serve your clients in an efficient, effective and profitable manner. To learn more about our service offerings and the impacts of the DOL Rule, complete our contact form or call us at (804) 965-5400 and one of our Relationship Managers will be happy to help you.
Please complete the form below to download more information on the new DOL Fiduciary Rule, including:
Slides from our recent webinars:
- Anatomy of a Risk Assessment – Preparing for the DOL Fiduciary Rule Change – August 31, 2016
- Now What – Next Steps in Preparing for the DOL Fiduciary Rule Changes – October 26, 2016
- Are You Ready for June 9th and the DOL Fiduciary Rule – April 10, 2017
- Are You Ready for April – Training and Education Around the DOL Fiduciary Rule Change – January 11, 2017
- The Countdown is On – What’s Your DOL Game Plan – May 10, 2017
- DOL Check In – Where Are We Now – June 28, 2017
Oyster Consulting Blog Posts:
- SEC Fiduciary Standards Update – April 19, 2018
- DOL Extends Fiduciary Rule Transition Period – November 29, 2018
- Stop Waiting – The DOL Fiduciary Rule Implementation is June 9th – May 23, 2017
- DOL Fiduciary Rule – What You Need to Do by June 9th – May 8, 2017
- Preparation for Compliance with the DOL Fiduciary Rule: The Review Process – August 8, 2016
- The Challenge of Complying with Multiple and Differing Fiduciary Rules – June 8, 2016
- DOL Fiduciary Rule – What IAs Should Be Doing Now – April 20, 2016
- DOL Fiduciary Rule – How Will It Impact Investment Advisors – April 18, 2016
- DOL Fiduciary Rule -Time for Acceptance – April 13, 2016
- The SEC’s ReTIRE Initiative – An Examination Initiative Focused on Products and Services Provided to Retail Investors Saving for Retirement – February 8, 2016
- Dept of Labor Fiduciary Standard White Paper
- SEC Fiduciary Standards Update