DOL rule compliance: the proof is in the plan

August 4, 2016 by Dan Pappas

DOL rule compliance

About the author:

Dan Pappas

Business development representative

As a recent graduate of the Milwaukee School of Engineering, Dan likes to bring his technical background into understanding the FinTech industry. Paired with a desire to help others, he is working to make sure everyone has a chance to succeed in what they are doing.

One of the biggest issues on the minds of financial advisors since the second half of 2015 has been the DOL rule. Advisors are concerned about its effects on how they do business, especially those who have been in the industry for decades. It is a monumental change to say the least, and to the dismay of many, it is here to stay.

In Q2 of this year, brokerage groups significantly outspent others in attempting to put an end to the ruling; however, they have still failed to stop the bill. This is especially interesting because in a private study done by Jeff Yamada, a wealth counselor at MCS Family Wealth Advisors and former president of the FPA of Central Oklahoma, opposition to the ruling outspent those in favor of it 10 to one. This further proves that closing your eyes and hoping it will go away will not be the way to find success after the ruling becomes law.

What can be done to help prepare for DOL rule compliance?

One of the options that advisors have to minimize the amount of turbulence their existing clients will face in the wake of the ruling will be the grandfather provision. The grandfather provision basically states that any advice given before April 10, 2017 will be regarded after the old set of rules. However, be advised that advisors who change firms and try to bring their accounts with them will most likely lose that grandfathering at that point in time.

So, really the best way to do prepare for the ruling is to take a deep breath and realize that things are going to be okay. Great advisors everywhere are already putting the needs of their clients ahead of their own, they just need to take the time to make sure that effort is recorded.

It is clear that technology will play a large role in DOL rule compliance. For example, using a financial planning tool like NaviPlan® allows an advisor to continue providing the excellent level of service but also know that if they were to be audited, they would have the proof that they upheld the fiduciary standard set forth by the DOL.

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Advicent recently launched Narrator® Clients and Narrator® Advisor to empower a collaborative and proactive client-advisor relationship. These tools provide advisors a way to remain compliant and offer advice with the client’s best interest in mind. Financial planning software was often regarded as “nice to have,” but the DOL is now driving it to be a “need to have.” If advisors want to remain relevant in the digital world and remain compliant to new legislation, they need to re-think the way they work.

By providing a comprehensive and in-depth financial plan, the client will feel more secure with their financial future. The advisor will also be able to present their options with confidence by utilizing our robust calculation engine that will provide accurate projections with retirement planning and asset management.