10 Things You Didn't Know About the DOL's New Rule

Note: This article is courtesy of Iris.xyz

By Carolyn Rose Kick

In the wake of the DOL’s announcement of the new fiduciary rule, many advisors were left asking–how is it going to effect me? Check out 10 things you didn’t know about the DOL’s new rule.

1. It doesn’t start immediately.

The rule includes a “delayed implementation clause” which gives firms plenty of time to prepare for compliance. It isn’t until January 1st, 2018 that firms are expected to be to completely compliant with the new law. However, by April, 2017 advisors are expected to be acting as fiduciaries, disclosing potential conflicts of interest to clients, and complying with the best interest standard.

2. Its “fiduciary standard” covers any type of retirement-planning advice.

Some advisors may wonder if the new law applies to their firm. Although the rule is long and convoluted–clocking it at over 600 pages–the simple answer is this: if you offer any type of retirement advice, this law applies to you. This includes advisors offering advice to groups (i.e. an employer-sponsored retirement plan) and individuals. Individuals include plan participants and IRA owners.

3. Retirement-planning advice doesn’t cover everything.

Lawmakers wanted to ensure that the new rule wouldn’t stop advisors from providing educational services. So advisors don’t have to maintain a fiduciary standard when providing general education on retirement saving. This includes things like newsletters, presentations, marketing materials, and any other information not considered a “recommendation.”


4. It doesn’t change the commission advisors can earn, but does require a commission disclosure.

Originally, some advisors were concerned that the new rule would affect their ability to make a commission on proprietary products. While this law may make it more difficult to sell commission-based products (since all advisors must meet the fiduciary standard), it doesn’t ban commissions. In order to sell clients commission-based products, all advisors must do is have clients sign a disclosure, called the Best Interest Contract Exemption (BICE).

5. Prospects don’t have to sign a disclosure immediately.

When the initial bill was proposed in April, 2015 many advisors feared that the BICE would scare away prospects. Luckily, law-makers took this concern into consideration and changed the rule so that prospects don’t have to sign a BICE until they receive account-opening materials.

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