While many in the investment community are worried about the increased regulatory climate and what it means for their business, many registered investment advisors (RIAs) are feeling confident that their model is the correct one: And the increase in their clientele the past five years has shown increased risk can come with great reward.
With the economic crisis of the past few years ravaging individual retirement savings, many investors have flocked to RIAs, advisors they know will keep their best interests at heart when choosing investments because they choose to take on the major responsibilities of being fiduciaries.
“As a fiduciary for investment plans it underscores some of the things we have focused on for a number of years, really, which is the importance of having a good documented process, meeting on a regular basis, following our investment policy statement and benchmarking plan fees, including our own, on a regular basis,” Altimont said. “We’ve seen this standard get stepped up in the last couple of years and we have this particular ABB case that moves the bar even further along in terms of where fiduciaries have to be. I think that for the first time in the ABB case, you have a situation where fiduciaries are clearly being held to the ERISA standard vs. just having a good plan not being good enough, which was clearly the case with ABB.”
The interesting part about the ABB case is that the company’s investment policy plan wasn’t unreasonable, but the “fiduciaries weren’t doing what they were supposed to do under ERISA guidelines,” he said.