Preparing for DOL Rule Implementation: Back to School

cont-eduDOL Rule Implementation

The DOL fiduciary rule has had plenty of critics, caused some anxiety for sponsors and advisors alike and most of the attention has been focused on the affects it will have on business relationships and how it will affect the industry overall.  At the heart of the legislation it changes the nature of information and education being provided to participants.

In the Fiduciary Matters Blog, author Justin Witz writes, “EDUCATION ISN’T A BEST PRACTICE IT IS A REQUIREMENT

The moral of the story here is that sponsors, advisors and financial institutions need to set about the task of acquiring information about products and fees and properly communicating them. We have already seen the legal dockets filling-up with law suits at virtually all levels of the DC plan ecosystem. For the most part, the burden will fall upon the advisor, but with the specter of civil litigation ever-present, vigilance must be kept-up at all levels.

“While we await the DOL’s response to many questions, a plain reading of the statement above implies a new fiduciary standard of product expertise, not previously expected of advisers in the past, has been established”, says Witz.

With the April 2017 deadline fast approaching, there is little time to waste and financial institutions as well as sponsors will need to make some tough decisions on the state of readiness of their advisors. This includes training on investment products as well a s ERISA training. The stakes have never been higher for advisors and providers.

While most of the burden falls upon the advisors, sponsors may have collateral liability and should know what to look for and ask some basic questions about educational awareness. Sponsors should ask their advisors specifically:

  • What training they received about the products they recommend?
  • Does the provider issue certificate of completion for training, if so, ask to see them?
  • Is the training overseen by a qualified compliance officer?
  • Did the advisor receive ERISA training from qualified legal experts?
  • Does the advisor have third-party professional training?

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