Breaking down the DOL regulatory package: Taking on a fiduciary position for the first time?

My 25-year college reunion is just around the corner so, I’ve been reminiscing lately about the ‘good old days’. And then, started thinking about my son – a high school senior – going off to college next year. I remember how hard the academic transition from high school to college was for me and thought I really should offer him some insight.

So I pulled together my best recollections of my freshman year. Yes, I went through an initial shock adjusting to the pace and volume of the coursework, but I found a way to adapt and, before long, set a pretty solid foundation for the rest of my college career. Ultimately, besides living and breathing the proverbial ‘buckle down and work hard’ mantra, I realized three things helped me succeed:

  • Understanding my professors’ expectations
  • Getting organized
  • Taking notes

As I talked to my son about college coursework, I realized these tips apply equally to broker-dealers and advisors contemplating engaging as a fiduciary for the first time under the Department of Labor (DOL) fiduciary regulatory package. If you’re taking on such a role, consider these tips:

Understand the new fiduciary landscape and expectations

To begin with, just know that expectations will be higher once the DOL regulatory package is implemented in April 2017. As an advisor, you will be held to the ‘best interest standard.’ What does that mean? It means that if you are making recommendations, they need to reflect those that a prudent expert in the field would make and act with a duty of loyalty.

It’s a high bar, which is why many broker-dealers and registered investment advisors (RIAs) are creating guidelines to help you meet these lofty expectations. These might include rules on available compensation models, like: 1) commissions and fees; 2) levelized compensation structures; and 3) ERISA budgets. They may also include the type and extent of fiduciary recommendations that can be offered, as well as the tools, resources and systems to support any recommendation.

In advance of the upcoming implantation date, before considering any changes, look to your broker-dealer for guidance. The last thing you want to do is to implement changes only to find they are not fully supported by your broker-dealer.

Get organized

Start by documenting your interactions and engagement with your clients. Here’s a list of questions you might want to have written down for each client:

  • How are you paid from this client?
  • Is that pay level? If not, why … what are the reasons?
  • What record-keeper are you working with?
  • Is your client utilizing a third-party fiduciary service, like Wilshire Associates?

This information will help you be better prepared when your broker-dealer provides additional direction.

Take notes – document fiduciary decisions

If you move to a fiduciary role, it will be vitally important to document meetings, conversations, evaluation processes and decisions. While you may have the best interests of plan participants in mind when providing client recommendations, if you fail to document the process and rationale behind it, you’ll be putting yourself, your broker-dealer and your clients at risk. So, start documenting or, at least, create a framework for how you’ll document conversations in the future.

The post-DOL fiduciary regulatory world is just around the corner. It’s time to get informed, get prepared and follow the guidance from your broker-dealer. Use the above-mentioned tips to prepare yourself for what’s coming. I sure hope my son understands the importance of preparing for what’s coming.

Stay tuned. I’ll be sharing more information on how one might work with their clients in the post-DOL regulatory world. I’ll continue to share updates from Principal and our industry partners as well as provide you with assistance as your firm establishes an approach to comply with the new regulatory requirements.

For additional tools, resources and information about the DOL fiduciary regulatory package, visit

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