Jason Roberts,  Guest Columnist

This type of regulatory oversight points to a need for the industry to rethink their standard business models.  Specifically the DOL is obviously targeting "asset capture" programs here.  If the advisory industry as a whole were to prioritize their fiduciary obligation to clients over fees, these types of regulations would be superfluous.  I would suggest the way forward is to stop building "work-arounds" and rethink the problem with a fresh sheet of paper.  For example, if the advisory business model didn't provide an incremental benefit to the advisor for rolling over old 401(k)s, this issue goes away.

With the DOL's new rule 95% likely to get finalized, RIAs need to be wary -- it targets them with new letter-of-the-law ERISA red tape

Pension Resource Institute

Retirement Law Group

Jason Roberts

The days when RIAs were the outsiders at the 401(k) party are fast coming to a close. What's new is that the mass of 401(k) assets 
is getting critical at about $3 trillion; fiduciary advisors are getting appreciated; fat fees and questionable kickbacks are getting exposed and stepping out of line is getting dicier as the Department of Labor tightens the regulatory screws.

The old reasons why the 401(k) business is attractive are still in place: there are fresh assets pouring in every month and when employees leave jobs or retire, they produce rollovers that build up IRA accounts for financial advisors. The drawbacks of getting into the 401(k) business are still in place, too. Dealing with retirement assets is really a second line of business and it remains -- unless you overcharge with hidden fees -- a low margin business with high potential fiduciary liabilities.

Still, the outsourcers, infrastructure and accumulated knowledge for RIAs to capitalize on is growing daily and a the mega-shift of assets away from brokers is making the 401(k) business riskier and riskier -- to ignore.

401(k) Stories

The past two years have been some of the most momentous in the relatively short history of the RIA profession. Legislators and regulators have been gradually embracing the fiduciary standard, though whether it will fully apply to everyone calling themselves advisors remains to be seen.

The Department of Labor’s crusade to lower costs and increase transparency in retirement plans means a spate of new regulations affecting advisors and brokers in that market. Dodd-Frank Financial Reform, meanwhile, continues to unroll across the profession, with the biggest change being a shift to state oversight of RIAs with less than $100 million AUM. In this section, you’ll find continually updated RIABiz.com coverage on all these topics.

RIA Compliance

Right now, most RIAs recommend IRA rollovers without having to jump through a lot of hoops, but DOL's 'exemption' makes a federal case out of suggesting the move away from the protection of the employer’s plan

With the DOL's new rule 95% likely to get finalized, RIAs need to be wary -- it targets them with new letter-of-the-law ERISA red tape

Brian Patrick Murphy

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November 18, 2022 at 2:56 AM

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With the DOL's new rule 95% likely to get finalized, RIAs need to be wary -- it targets them with new letter-of-the-law ERISA red tape

Brian Patrick Murphy

Related Moves

November 18, 2022 at 2:56 AM

RIABiz Directory

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