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To the surprise of some, Dept. of Labor grants get-out-of-DOL-rule-jail card to 225,000 firms that dabble in the 401(k) business

Without recent guidance, 401(k) specialists were set to devour one-off accounts held by brokers but new DOL rule guidance offers well-lit path to build toward a far larger 401(k) practice

Author Lisa Shidler August 15, 2017 at 12:54 AM
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Fred Reish: It may be that the broker-dealers will limit the advisors who can work with large plans.

Tom Zgainer

Tom Zgainer

August 15, 2017 — 4:09 PM
While dabbling in painting, or writing poetry is a fine thing.....plan sponsor and participants, real people trying to save for a dignified and secure retirement, do NOT need dabblers involved in their financial future. Not brokers moving them from provider to provider every couple years so they broker can get a 100 bps upfront, fee, not brokers sending plans to insurance company providers that are marking up index funds 700% or more..(because they can't get paid on those funds so this ensures they do), not brokers sending plans to insurance companies that will add 1% to 2% in "Contract Charges, or "Program Charges" or other made up fees purely designed to line the pockets of the brokers and insurance companies at the expense of the real people inside the plan socking away a portion of their pay....and thinking that money is working for them. To suggest dabblers can become experts due to resources is like saying I can be a pilot after going in a few hours in flight simulators. Please, dabblers...find a new career path.
Stephen Winks

Stephen Winks

August 15, 2017 — 4:12 PM
Why should b/ds care about supporting expert standing in advisory services as required by statute when the DOL doesn't care? The positive implications of b/ds supporting fiduciary duty of brokers acting in an advisory capacity is that "retail" investors might benefit from brokers understanding and acknowledging fiduciary duty in the client's best interest. The entire industry is moving to fee for service and a more detailed delineation of the services provided. This is made easier when b/ds are obligated to acknowledge and support the fiduciary duties of their brokers when serving retirement accounts. All brokers have a vested interest in achieving professional standing in advisory services, hopefully this motivation will press b/ds to support fiduciary duty of the broker in spite of this DOL Ruling. SCW.
michael sanford

michael sanford

August 15, 2017 — 4:58 PM
Shouldn't the person telling you what to do with your retirement accounts be legally required to act in your best interest? Sounds simple enough, but regulation to that affect has long been resisted by the financial industry. I believe the new DOL rule will help B/Ds instead of hurt them with the shift to fee based accounts rather than commission based. This move will als assist financial technology and information firms, Robo advisors,, ETF and index firms. The focus on investment advice has shifted from managed accounts that have higher asset management fees to fee based accounts. It's the same debate the financial industry has been having for years: active vs passive and fee based vs commission. Shouldn't the person telling you what to do with your retirement accounts be legally required to act in your best interest?
Pat Mulvey

Pat Mulvey

August 15, 2017 — 5:03 PM
I agree with and enjoyed reading Tom's comments especially (Steve's too). Here's what I don't get- regardless of what the ultimate outcome of the DOL stuff is- the plan sponsor (committee /Board) overseeing the assets is at huge risk. Let's say the DOL says 'let's scrap this fiduciary stuff' - it doesn't change the responsibility of the sponsor which is obligated to demonstrate they are acting in a prudent manner. If they don't there can be all kinds of bad stuff including personal liability. Plan sponsor beware regardless of the outcome-
Brian Murphy

Brian Murphy

August 16, 2017 — 7:44 PM
I think it's pretty clear at this point that the industry is broken and the regulatory bodies are at best dysfunctional. The only way the status quo changes is for a new business model to be introduced that is so obviously better than the current sad state of affairs that it renders the unsavory players obsolete - from the perspective of the sponsors, the employees and the RIA community. It will be part low cost plan provider (Tom, that's your piece - hope you continue to do well), and new ways of engaging the participant with a combination of personal education and advice/management. It won't come from existing "stakeholders", as they have no incentive to risk their current agendas. We're taking on that task and are happy to do so. To the extent others wish to become involved we're happy to have you onboard.
Stephen Winks

Stephen Winks

August 18, 2017 — 12:25 AM
Brian, , I was wondering if I were the only person who saw things this way>SCW
Brian Murphy

Brian Murphy

August 18, 2017 — 5:07 AM
SCW - nope, your concerns are warranted and reflected in the views of quite a few others I suspect.
Stephen Winks

Stephen Winks

August 18, 2017 — 3:14 PM
100% of clients prefer their best interests being served rather than the b/d's, yet given advisors are at the mercy of their b/ds compliance protocol which do not acknowledge or support their brokers rendering advice, it seems it doesn't matter what the client or the advisor thinks is relevant as b/ds have a mind of their own regardless of statutory imperative. The fact that the SIFMA and the FSI oppose fiduciary duty for brokers is the principle impediment to professional standing of brokers when rendering advice. SCW

Mentioned in this article:

Pension Resource Institute, LLC
Compliance Expert
Top Executive: Jason C. Roberts

Retirement Law Group, PC

Top Executive: Jason C. Roberts



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