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DOL’S Final Fiduciary Standard Rule – What's in Store for Financial Professionals?

By Jonah A. Toleno, Esq.  of Shustak Reynolds & Partners, P.C. posted on Wednesday, April 20, 2016.

The U.S. Department of Labor has at last issued the final version of its highly-debated “Fiduciary Rule”. The full text of the Rule, available at the Department of Labor’s website, comprises over 800 pages. In a nutshell, the Rule requires all financial advisors and brokers who give retirement investment advice to IRA’s (individual retirement accounts) and plans to adhere to a “fiduciary” standard. This means financial services professionals and firms must put clients’ interests first when doling out retirement investment advice. Many advisors and brokers would argue that they already adhere to this principle when advising clients, so what exactly does this mean? Generally, the Rule’s 800 pages of provisions and exemptions require financial professionals to implement new “best interest and “impartial conduct” policies and make additional investment disclosures not previously required. Essentially, advisors and brokers may not be paid for their retirement investment advice without meeting a “prohibited transaction exemption”, also known as a “Best Interest Contract Exemption” (BICE). The new, final Rule sets forth specific requirements for meeting this BICE. Some examples of potential exemptions include asset-based compensation, variable commissions based on certain asset classes, and third-party-created computer models for investment recommendations. The DOL expects its final Rule to take effect by April 2017, and full compliance by all financial services firms and individuals by January 2018. The Rule likely will draw criticisms and favor from various sectors of the financial services industry. If you are an investor with questions on how the new Rule will affect your retirement accounts, or are a financial professional with concerns about the Rule’s potential effects on your business, feel free to contact us. Our attorneys are well-versed in all aspects of securities and financial services law and are available to speak to you anytime.

Shustak Reynolds & Partners, P.C.’s securities attorneys and FINRA attorneys represent investment advisers, stockbrokers, brokerage firms and investors in claims involving employment and promissory note disputes, investment disputes and FINRA and SEC regulatory proceedings.  Contact us today for a confidential analysis of your situation.

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