Each week we’re giving you our weekly report highlighting the top compliance news articles from various industry news publications. We have selected the most relevant and important news articles related to registered investment adviser (“RIA”) compliance and regulatory issues. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of November 26, 2016:
- What Phyllis Borzi Has to Say About the DOL Rule Now (Author- Mark Schoeff Jr., Investment News)
Despite President-elect Donald Trump taking office in 2017, Phyllis Borzi, Labor Assistant Secretary, claims that the forthcoming Department of Labor (DOL) fiduciary rule has already began reducing fees in the industry and that there is too much momentum in that direction to now go back. Mark Schoeff Jr. reports that several wirehouses and independent broker dealer (IBD) firms have already confirmed that “they will no longer offer commission-based products in retirement accounts” in order to act in the best interests of their clients. Regardless of President-elect Trump’s plans for the future of the new regulation, Borzi assures, “we’re really not going back to the old ways.”
- A Trump Repeal of the DOL Fiduciary Rule? Not So Fast (Author- Bernice Napach, Think Advisor)
Think Advisor reporter, Bernice Napach, reports on how the election of Donald Trump doesn’t guarantee that the DOL fiduciary rule will be eliminated anytime soon. After attending a panel at the Nasdaq Advisor Symposium, Napach writes that “a Trump administration may delay the rule from taking effect on April 10, 2017, and/or tweak some components but it is unlikely to quash it … yet. In other words, advisors should continue to prepare for the rule’s first enactment in mid-April.” Gregg Zeoli, founder and CEO of Empire Asset Management, also makes the point that “broker-dealers who don’t have an affiliated investment advisor will face one of the biggest challenges” in regards to complying with the DOL fiduciary rule.
- DOL Compliance: The New Growth Industry (Author- Jerilyn Klein Bier, Financial Advisor Magazine)
Jerilyn Klein Bier writes that “financial technology providers are steadily unveiling new products aimed at boosting compliance” in regards to new DOL fiduciary rule. She provides a great summary of the latest tools being released by industry technology leaders including Envestnet, eMoney, Riskalyze, SEI, and Redtail. While some technology providers believe new technology is the answer to comply with the new regulations possibly taking place, others believe that RIA firms may want to first focus on better utilizing technology they already have in place such as a customer relationship management (CRM) system or portfolio management and reporting (PMR) system. G.J. King, President of RIA in a Box, cautions that “we do not think advisory firms should be jumping in and purchasing every new piece of technology.” Rather King believes “it’s actually much less about new technology and much more about creating and ensuring compliance processes within your existing technology.”
- IBDs Overwhelmingly Say Trump Should Revoke Fiduciary Rule: Survey (Author- Greg Iacurci, Investment News)
According to a recent survey, 86% of registered representatives of independent broker-dealers believe that President-elect Trump should revoke the DOL fiduciary rule. The rule makes sales of high-commission products much more difficult while also increasing compliance costs and litigation risks. Greg Iacurci notes that Congressional Republicans have been vocal critics of the rule since it was announced. However, some in the industry are skeptical of this survey conducted by the Financial Services Institute (FSI) conducted one week after the election.
- In DOL/Post-DOL Fiduciary World, RIAs Need to Re-Differentiate (Author- Knut A. Rostad, Think Advisor)
Knut A. Rostad, President of the Institute for the Fiduciary Standard, reflects on the past three months and the importance of RIA “re-differentiation.” First, October brought about as many as 49,200 brokers from multiple major firms becoming fiduciaries to retirement accounts where they will act under the DOL Best Interest Contract Exemption (BICE). More firms are predicted to follow. The November election caused many to voice their opinion on wishing to repeal the rule, which is definitely not quick nor easy. Ultimately, Rostad concludes “re-differentiation should be the best practice of any advisor in the DOL/post-DOL fiduciary world that lies ahead.”
Don’t forget to check out last week’s top RIA compliance news articles on the DOL fiduciary rule and cybersecurity. Be sure to check back next Friday for next week’s top articles!