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2016 DOL Fiduciary Rule Confusion

2016 DOL Fiduciary Rule change sparks lawsuits and confusion among industry firms and advisors

Download the DOL Fiduciary Rule guide

Guide to 2016 Fiduciary Rule

Since the adoption of the Fiduciary rule change in April 2016, BDs and RIAs are scrambling to understand how it will affect them, what to change, how to implement it, and whether or not the stemming lawsuits will prevail. Many compliance officers are confused by the new standard taking place and even further concerned about making changes that will later be reversed if the rule itself is reversed.

Firms cannot count on the flurry of lawsuits to stop this bit of legislation. However they may result in a few changes or further clarifying language. 

What are the Fiduciary rule lawsuits all about?

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FINRA Risk Culture

DOL Fiduciary Rule Change – good or bad, its here

Department of Labor released a final statement April 6, 2016 on the Fiduciary Rule for brokerages, representatives, and investment advisors working with senior investors and retiree investment products.

FINRA Risk CultureWhile the rule is a lighter version of the original proposal and provides concessions for BD’s and RIA’s with senior retiree clients, the purpose is clear; new fiduciary standards are expected, documented, and required going forward.

Labor Secretary Thomas Perez said, “We are putting… a fundamental protection into the American retirement landscape. A consumer’s best interest must now come before an advisors financial interest.” The rule as it was proposed has been scrutinized and changed several times of the past 6 years in consideration of comments from consumer groups, industry firms, and other stakeholders. Now a final version is in place and firms can begin drafting and adapting to new policy and procedure requirements.

Talking points of the 2016 DOL Fiduciary Rule

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Senior Adviser Regulations

Dept of Labor Stepping Up to Fiduciary Responsibility for Retirement Advisers

Senior Adviser RegulationsProposed rule:  Labor Department proposes to hold retirement investment advisers to a fiduciary standard, leaving them to avoid conflicts of interest that include sales based on commission and sales performance compensation.

With the proposed rule back on the table and likely to pass, brokers and insurance agents will be pressed to update conflict of interest policies and procedures.  FINRA focus on senior and vulnerable investors has increased over the past years. In 2016 FINRA plans to make treatment of senior investors a priority and urges firms to monitor investor accounts for red flags like overly aggressive investments, unusual asset movements, and an unusual number of high cost products driving unsuitable recommendations. Read more