While 2018 had the end of the DOL rule, it doesn’t mean that regulation for 401(k) plans and advisors has gone away. With the SEC’s rule incoming in 2019, and some vigorous enforcement of current rules, fiduciaries do need to stay on their toes.
Things to Keep in Mind
Based on recent research and opinions of Financial Industry Regulatory Authority, the following trends should be considered by fiduciaries in 2019:
- Large companies will keep on getting bigger, more companies with over $1 billion value will come into the market;
- New and low-cost advisory offers will emerge, so make sure you monitor the market properly;
- Modern IT technologies will become more popular among advisors, so choosing a good informational service will bring more value to your expertise.
A State Affair
In September 2018, New Jersey was the first state to take action on a fiduciary rule after the DOL rule’s death, but experts think other states will likely jump on board. This may lead to multiple approaches to the fiduciary standard. For example in New Jersey the state rule would “ create a uniform fiduciary standard for both brokers and registered investment advisers.”
Be sure to also read what people are saying about state fiduciary rules.
The Labor Department plans to issue in September 2019 a revised final fiduciary rule package to replace the one vacated this spring by the U.S. Court of Appeals for the 5th Circuit, according to Labor’s fall regulatory agenda. (source)
The Securities and Exchange Commission plans to issue a final rule by September 2019 on its standards of conduct package covering investment advisory professionals, according to its updated regulatory agenda.
- A best-interest standard that compels brokers to put clients’ financial interests ahead of their own and requires them to mitigate financial conflicts.
- The client relationship summary, or Form CRS, which necessitates that firms disclose to retail investors the nature and scope of their services, the types of fees customers would incur, the conflicts of interest faced by the firm and the firm’s disciplinary history.
- A standard of conduct for investment advisers that states advisers have a duty to act and provide advice that is in the best interest of the client. (Source)
Even without the DOL’s rule and the SEC’s rule yet to be finished, there are still plenty of regulations and rules that fiduciaries need to follow. It seems more than ever, regulative bodies are going to start enforcing existing fiduciary obligations even more than they have in the past. Acting in the best interest of the client as a fiduciary is a top priority and something that is going to be watched much more closely while we await even more fiduciary rules. Advisors should definitely stay alert of their fiduciary responsibilities in 2019 and be ready for even more regulations that will be coming out in the next year.