Financial Advisor provided an overview of a Faegre Drinker webinar in which investment management partner Jeffrey Blumberg and benefits and executive compensation partner Fred Reish discussed how registered investment advisers (RIAs) are approaching the Department of Labor’s (DOL) complex fiduciary rule.
In the article “Some Advisors Stop Giving Rollover Advice Due To DOL Rule Complexities,” the publication reported that some fiduciary advisers are underestimating the complexities of the new regulatory rule, while others are opting not to commit the resources to build the systems needed to become compliant.
“I do a lot of work with smaller RIA firms. They don’t have significant internal structures to build some of these necessary systems to comply with the DOL rule. So, they’re going in the direction of ‘let’s avoid making that rollover recommendation,’” explained Blumberg.
Blumberg said that for RIAs that do intend to conduct rollovers, the adviser must make a full explanation and document all the assumptions they use to justify the rollover recommendation. Reish added that, alternatively, RIAs would have to pull back and rethink if they want to make recommendations.
The process is more complex than some RIAs believe, even though the deadline enforcement of the DOL fiduciary rule is just six months away. “This is asking for all data specific to that participant with a recommendation specific to that participant,” noted Reish.