April 01, 2021

Fred Reish and Brad Campbell Break Down Compliance With Investment Advice Rule for InsuranceNewsNet

InsuranceNewsNet shared webinar insights from benefits and executive compensation partners Fred Reish and Brad Campbell on what advisers and agents can expect from the Department of Labor (DOL) regarding compliance with the investment advice rule.

In the article “Investment Advice Rules On Standby, Targets End Of 2021,” Reish said there is a lot of work to be done. “Nobody anywhere has the processes in place to satisfy these conditions, and they are burdensome,” he stated. “It is going to take between now and Dec. 20 for broker-dealers, banks and trust companies, insurance companies and investment advisors to get all these policies and procedures in place.”

In particular, firms will need to figure out ways of measuring reasonable compensation, Reish explained, and the ways to mitigate compensation if a conflict exists. It’s going to be “a heavy lift” to get those policies and procedures in place by Dec. 20, Reish said.

Campbell said advising on rollovers will continue to be a tricky area until the DOL clarifies it further. Currently, the key aspect is whether there is any thought of meeting the client again in the future to follow up on the rollover advice or transaction.

“If the answer is, ‘Yes, we both intend to meet in the future,’ the DOL views it as an anticipated ongoing relationship,” Campbell explained. “In other words, the beginning of an advice relationship that is fiduciary from the initial advice.”

Campbell does not expect guidance to come out anytime soon. “My guess is that things will probably sit as they lie for a while, while the new administration decides how to proceed,” he said.

Campbell also noted, “Whether to do a new rule changing the 1975 regulation for what defines fiduciary advice or changing or eliminating the five steps,” there are “still other shoes to drop down the road potentially, but we probably are entering a period where there’s some stability in the position the government’s taking.”

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