IAA Alert: April 18, 2017 - IAA Urges DOL to Modify Fiduciary Rule


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IAA Urges DOL to Modify Fiduciary Rule

April 28 Briefing Will Update Members on Rule Status, Pre-June 9 Deadline Preparations

April 18, 2017: Yesterday, the IAA submitted comments to the Department of Labor in response to its notice of a proposed rule on the Fiduciary Duty Rule. The DOL requested comment with respect to the updated economic and legal analysis required by the Administration’s February 3 memo, as well as questions of law and policy concerning the final rule and exemptions and suggestions for reducing compliance burdens.

The IAA has long advocated that financial professionals providing investment advice about securities be required to act as fiduciaries. Our letter observed that, as SEC-registered investment advisers, the IAA’s members are fiduciaries under the Investment Advisers Act and, with respect to their retirement plan clients, are already fiduciaries under ERISA.

The IAA stated that the Rule will nevertheless have significant consequences for registered investment advisers that will unnecessarily increase their compliance burdens without providing significant benefit to their clients - who are already receiving advice from a fiduciary. The IAA urged the DOL to revise the rule to take into account investment advisers’ concerns while still promoting widespread access to fiduciary retirement investment advice.

In particular, the IAA advocated that the Rule’s obligations should exclude pre-contractual communications where an investment adviser will be a fiduciary once the client engages the adviser. The IAA also requested that the Rule:

  1. adopt a broader, more practical “hire me” exception;
  2. broaden and clarify the “independent fiduciary exception”;
  3. clarify that intra-company conversations do not trigger fiduciary status; and
  4. broaden and clarify the Streamlined BIC.

In the meantime, the applicability date for the DOL’s new fiduciary definition remains June 9, 2017. In addition, the Impartial Conduct Standards in the BIC and Principal Transaction Exemptions will be applicable on June 9. Compliance with the remaining conditions in those exemptions is not required until January 1, 2018.

The IAA will hold a briefing via webinar on April 28 at 2:00 p.m. ET on the status of the DOL rule and what investment advisers should be doing to get ready by June 9. The briefing is free to members. Click here to register.

IAA members with questions should contact the IAA legal staff at iaaservices@investmentadviser.org or at (202) 293-4222.

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