Last April (2015), the Department of Labor proposed regulations that would require a best-interest contract between advisors working with retirement accounts and their clients. If you haven’t been paying attention, you can read up on the proposed regulation here. In short, the rule would establish a contract that would legally require advisors to act in their client’s best interest and will allow firms to set prescribed compensation models. The DOL released a fact sheet on the proposal that you can access here.
For almost a year now, advisors have been on the defense – both advocating against the regulation and worrying about how it is going to affect their business. NAIFA has been leading the charge lobbying against the rule arguing that the regulations would reduce the availability of services and advice advisors are willing to provide to clients; some advisors may choose to shift their practices away from retirement business; Consumers may be unable to continue working with trusted advisors. NAIFA explains why and how the DOL Fiduciary Proposal would have a great impact on advisors here. There is also a fact sheet from NAIFA here.
We know the proposal is not what our industry needs. However, until it has become law, it is business as usual. As advisors, it is our duty to provide our clients with the best information and the best products that we can. We can’t press the pause button on our businesses to wait and see what the DOL is going to do with this proposal or how it is going to flesh out. We can be aware of what is going on, and we can join in the NAIFA efforts to lobby against it, but from a business stand point, we must keep moving forward in the same way that we always have.
If you are not a member of NAIFA, I strongly encourage you to become one. The association will not only lobby for our industry and its members but it will also provide you up to date information about the rule and how it is moving forward.
Be prepared for the possibilities that the regulation could bring with it, but do not be bound to it until it is the law of the land. Make sure that you keep working so that when changes do happen you are still in business.