Breaking down the DOL fiduciary regulation: What makes you a fiduciary?

There’s no doubt, the DOL fiduciary regulatory package has changed the financial services landscape. Simply put, it redefines the activities that make you a fiduciary under the Employer Retirement Security Income Act (ERISA).

If you’re like most advisors, you’ve already spent a lot of time thinking about how it impacts you and your practice. Right now, it’s imperative that you understand what’s changed and, specifically, what makes you a fiduciary and what that means. This five-minute video sums it up pretty well:

Be sure to look to your broker-dealer for guidance so you’re following final direction on the regulation. They are your best source of information and resources to help you through the transition.

Once you fully understand the regulation, circle back to your initial concern … ‘how does this regulation impact me and my practice.’ You’ll want to think about how to work with clients going forward. For example, you might want to:

  • Set expectations with your clients around fees and any new agreements that need to be signed;
  • Establish a process to select/monitor investment options and document decisions;
  • Ensure your clients understand co-fiduciary status; and
  • Understand the pros/cons of a third-party fiduciary service.

These and other questions related to working with plan sponsors will be future topics of this blog. Be sure to check back regularly and feel free to share your questions and comments below. I’ll do my best to address everyone in a timely manner. And, for additional tools, resources and information about the DOL fiduciary regulatory package, visit www.principal.com/advisorfiduciary.

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