Advisers failing to comprehend impact of DOL fiduciary rule: Massachusetts regulator William Galvin

A lot of financial advisers are in the dark when it comes to the impact that the Department of Labor’s new fiduciary rule will have on their businesses, according to state securities regulators from Massachusetts.

A survey of 327 Massachusetts registered investment advisers conducted earlier this year by the Massachusetts Securities Division found a lack of awareness of the impact on them of the Department of Labor’s fiduciary rule regarding advice on retirement accounts, according to a statement from William Galvin, the secretary of the Commonwealth.

The Massachusetts Securities Division plans to provide training in advance of the date when the rule goes into effect next April.
“While Labor’s rule will go a long way in providing for the safety and protection of retirement assets for average investors, the survey found that [Investment Advisers] who handle retirement assets covered by the rule do not believe the rule will impact them as they are already fiduciaries,” Mr. Galvin said in the press release. “As my office is the principal regulator of state-registered IAs, the survey results demonstrate a need for training which this office will be providing for free to investment advisers providing retirement advice.”

According to the Massachusetts Securities Division, advisers have confusion around the Best Interest Contract Exemption, or BICE, which would allow them to be paid a commission for selling products in retirement accounts.
“Under Labor’s rules advisers would be barred from representing interest adverse to those of the retirement investor and from receiving compensation from a third party regarding advice on retirement accounts,” according to the press release. “However, there is an exemption which allows receipt of compensation for advice on retirement accounts if certain contract requirement and standards are met, known as the BICE.”
Advisers responding to the Massachusetts survey “split fairly equally on whether or not they had written policies and procedures to mitigate conflicts of interest, something the BICE would require,” according to the release. A majority of the survey respondents said they wanted to receive training on the rule.
(See: DOL releases first batch of FAQs on fiduciary rule )

Related Topics: DOL fiduciary rule