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Thursday, September 16, 2021

What June 9th DOL Rule Date Means For You: How to Not Be a Low Hanging Fruit for Litigation Attorneys

What June 9th DOL Rule Date Means For You: How to Not Be a Low Hanging Fruit for Litigation Attorneys

On May 22, Secretary of Labor Acosta confirmed something that we argued since the DOL Fiduciary Rule got delayed in March. Specifically, he said that June 9th is the date when ANYONE advising on retirement assets effectively becomes an ERISA fiduciary, subject to one of the strictest legal standards ever devised. No more delays. If you perform any following transactions you will effectively be an ERISA fiduciary on June 9th:

  • Recommendations of investments, investment strategies, insurance and annuities, investment managers, other fiduciaries, distributions and rollovers, and IRA transfers;
  • Recommendations to ERISA plans, participants or IRA owners.

Fiduciary recommendations (including rollovers) will be subject to ERISA Prudent Man Rule and Duty of Loyalty and advisors are required to charge no more than a reasonable fees. As National Law Review writes “DOL has historically taken the position that a prudent process must be documented”. This documentation must show that advisor is acting in the investors best interest.

DOL Rule Compliance Documentation Package Must Include:

  • Assessments of fees (including plan admin fees, expenses, any other hidden fees)
  • Quality of instruments assessment
  • Risk & Risk tolerance
  • Services offered by the advisors vs. those currently offered
  • Benchmarking the advisor fee to ensure it is reasonable for the services offered

Micah Hauptman, a fiduciary expert and a financial counsel at Consumer Federation of America told us the following: “It’s important to note that, because rollover recommendations are now explicitly covered under ERISA, any recommendations to roll over must comply with the impartial conduct standards beginning on June 9th. Violation of these standards would constitute a prohibited transaction. In addition, because there is a private right of action under ERISA, an investor who is harmed based on a violation of these standards could directly enforce their rights.”  Thus, it is not the DOL who will enforce the Fiduciary Rule, it is the litigation attorneys.

Do not be the low hanging fruit for litigation attorneys. Do not be without a documented prudent process. Our IRAFiducairyOptimizer has been designed & built specifically for the DOL Rule by our award winning research team. It was called “…the most comprehensive solution” by Bob Veres in his extensive Advisor Perspectives study.

You may think you are protected through current processes, but even many large organizations are unprepared and surprised by this announcement. Many firms have delayed work on the compliance falsely believing that the rule will simply go away. You can add a layer of protection with IRAFiduciaryOptimizer today at a very moderate cost.  Set up your prudent process documentation before it is too late!


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