Advisers need to bone up on DOL fiduciary

Independent financial advisers need to get up to speed on the DOL fiduciary rule, as well as other regulations that could affect them, said Skip Schweiss, managing director adviser advocacy and industry affairs for TD Ameritrade Institutional.

For those who recommend individual retirement accounts and advise on rollovers, the compliance burden and risk of being sued for not operating in a client’s “best interest,” expands greatly under the proposed DOL fiduciary rule, Mr. Schweiss said in an interview Thursday at the firm’s national adviser conference in Orlando.

(More: More from Skip Schweiss: Regulatory trends that advisers can’t afford to miss)​

Additionally, the proposal would stop retirement advisers from being able to include derivatives among plan investments, he said. A growing population of advisers recommend derivatives in their retirement plans as part of a downside protection strategy.

“I’m seeing an ignorance about this rule on the part of RIAs,” Mr. Schweiss said.

A second proposed regulation would enlist investment advisers in the fight against terrorists, drug dealers and other criminals from laundering their money through the U.S. financial system. The Financial Crimes Enforcement Network, a unit of the Treasury Department, would require advisers to register with the SEC to establish anti-money-laundering programs and report suspicious activity to the government.

“Advisers will have to anti up and identify the illicit activity of their clients,” Mr. Schweiss said.

RIAs already should be paying attention to the “aggressive regulatory environment” coming out of the SEC under chairman Mary Jo White, said Tom Giachetti, a compliance lawyer and head of Stark & Stark’s securities group practice.

“The SEC is trying to make law where it doesn’t exist,” he said. “If you value your franchise, compliance must be top of mind all the time.”

All advisory firms should be making sure their chief compliance officer has the “smarts” to do the job and the support and authority of senior management, Mr. Giachetti said.

When the SEC examination staff comes into the office, first impressions are critical and those two elements are a must, he said.

To ensure compliance permeates every aspect of the firm, CCOs should be sitting in on every committee meeting the firm has on planning, marketing, etc., Mr. Giachetti said in a session of the TD Ameritrade conference.