Commentary on ThinkAdvisor article by Ric Edelman
Some registered investment advisors who don’t sell commission-based investment products may think the Department of Labor’s fiduciary rule doesn’t affect them — and they’re wrong, Ric Edelman writes on ThinkAdvisor.
Procedural and Operational Requirements
It’s not enough to serve the client’s best interests under the rule, according to Edelman, executive chairman of Edelman Financial Services. The DOL’s rule also puts operation and procedural requirements on advisors, he writes. Even advisors who don’t sell commission-based products such as real estate investment trusts or equity index annuities must still document what they do, according to Edelman.
That’s because the rule, once fully implemented, requires advisors to document exactly how their recommendations adhere to the “impartial conduct” requirement, he writes.
Edelman’s firm, for example, didn’t have to change gears as far as its investment strategies or the products it recommends to its clients, he writes. Nonetheless, the company is overhauling its documentation process, according to Edelman.
Even if the clients don’t perceive the changes as significant, regulators will be scrutinizing RIAs in regard to the impartial conduct standard, he writes. And this doesn’t just affect advisors at the firm level: it’s up to each advisor to understand what’s required, according to Edelman. He also suggests that independent advisors recruit compliance experts to verify that their process adheres to the new rule.
Source: ThinkAdvisor
Posted by: The Wealth Advisor
