RIAs tout their fiduciary status to clients as DOL rule implementation begins

Some wait for Trump to conclude review before telling clients about rule

Jun 9, 2017 @ 1:26 pm

By Liz Skinner

Some registered investment advisory firms reached out to clients in advance of Friday's partial implementation of the Labor Department's fiduciary rule to clarify expectations for those who may be confused by increased chatter about "best interest" advice — and to reaffirm they are already acting as fiduciaries.

AEPG Strategies, a registered investment adviser, sent a note to clients earlier this week pointing out that it acts as a fiduciary 100% of the time.

"We wanted to put it in perspective for clients, whose expectations are generally that their financial professionals are going to be looking after their best interests all the time, but in fact some are fiduciaries sometimes and not other times," said Chris Schiffer, AEPG Strategies' chief operating officer.

The new DOL fiduciary rule only requires that brokers act under a fiduciary standard of care for individual retirement advice and other retirement plans, the firm's note to clients on Tuesday said. The firm said it would support a universal fiduciary standard for advisers requiring best interest advice for all financial matters, not just retirement.

The DOL rule, which is scheduled to be fully implemented on Jan. 1, 2018, but could face changes, mandates that advisers provide retirement advice that's in the best interest of clients.

(More: DOL fiduciary rule takes effect, but more uncertainty lies ahead)

Beginning June 9, advisory firms must comply with the "impartial conduct standard," charge reasonable compensation and avoid misleading statements. The DOL, though, has said it won't pursue claims against fiduciaries until after Jan. 1, as long as they are "working diligently and in good faith" to comply with the regulation.

RIAs, which are already fiduciaries, have been especially proactive at keeping clients and prospects aware of the DOL changes.

"Such communications have reinforced that existing clients have made the right decisions to choose to work with an RIA," said Mike Byrnes, owner of Byrnes Consulting. "Also, for some prospects, it has been a key selling point that has ultimately led for them to choose to work with an adviser that is already a true fiduciary."

Not all RIAs, though, are informing clients about the rule at this time, mostly because changes are likely.

(More: Labor secretary Acosta: concerns with DOL fiduciary rule not heard)

Even as part of the rule has gone into effect, the Labor Department continues to review the entire regulation under an order from President Donald J. Trump. As a result, the rule could be modified or even dismantled.

Aspiriant, a $10.4 billion RIA, is one firm that decided against communicating with clients about the rule going into effect.

"We are all now in a waiting position to see what will change, or not, over the coming months, to see if we need to communicate with clients," Michael Kossman, Aspiriant's chief operating officer, said in an email. "Who knows, [it's] still possible the whole darn thing gets repealed!"


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