InvestmentNews Editorials

A technology response to the DOL fiduciary rule

To face the changing regulatory season squarely, it's time for some technological spring cleaning

Mar 20, 2016 @ 12:01 am

Spring has arrived, and millions of Americans adjusted by following the annual ritual of shifting their clocks forward on March 13. It's also now time to spring ahead on preparations for the final draft of the Department of Labor's fiduciary rule.

The repercussions of the rule will reach far and wide, and one big risk may be increased costs of doing business. That has prompted many financial advisers to review and revamp technology solutions to stay on the right side of compliance regulations coming down the pike. Yet many advisers are still ill-prepared, even at this late stage of the game.

As technology reporter Alessandra Malito pointed out in last week's Fiduciary Focus column, upgraded software for advisory practices should be standard protocol for all firms, not only to keep advisers in compliance but to help boost bottom lines and guard against losses.


Financial advisers “should prepare not only for the DOL rule today, but I think they should be very focused on figuring out how they can lower their internal costs through the use of technology,” Eric Clarke, chief executive of Orion Advisor Services, told InvestmentNews.

For advisers who fail to use technology, “it will be difficult to sustain current profitability levels,” Mr. Clarke said.

The bad news? If you haven't started yet, the clock is ticking, and it may be too late to avoid the initial financial hit. The DOL rule is expected to be released within weeks, resulting in a requirement that brokers and RIAs work in their clients' best interests for retirement advice. For advisers, “things they didn't need to think about, they're now faced with,” warned James Formanek, vice president of sales at Panoramix.

Indeed, to face the changing season squarely, it's time for some spring cleaning. A basic review of one's internal technology — by upgrading to the latest software, reviewing online security and building the right tech framework to document everything an adviser does to maintain the fiduciary standard — can make the industry more efficient and accountable to clients. Moreover, a basic review of one's internal practices will put a greater number of advisers in the best position to provide sound investing advice.


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