RIAs advising 401(k) plans that don't have broker-dealer affiliations or revenue relationships with proprietary investment products will likely feel little impact from the Department of Labor's proposed fiduciary rule, according to attorneys at Drinker Biddle.
That's because typically, RIAs acknowledge their fiduciary status and are compensated on a fee basis. The proposal's Best Interest Contract Exemption will allow advisors to recommend commission-based products so long as the advisor reveals both the costs of those products to investors and their intention to work as a fiduciary, or solely in the best interest of plan participants.
But, as the attorneys point out, RIAs could face higher disclosure obligations, new costs, and potential regulatory exposure if they are offering advice on how participants rollover plan assets.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
