The Department of Labor’s proposed fiduciary rule will makethousands of non-registered defined contribution plan advisorsfiduciaries “over night,” say analysts at Cerulli Associates.

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But if the finalized version of the complex rule resembles itsproposed form, it is not expected to stem the tide of401(k) rollovers to IRAs in the comingyears, claim the analysts.

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When the DOL unveiled its proposal last April, it built its casefor the new rule’s necessity largely on the argument that IRAowners often receive conflicted advice, amounting to billion islosses to savers a year.

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The more than $2 trillion expected to rollover from 401(k) plansin the coming years underscores the need for a uniform fiduciarystandard for all advisors, argue proponents of the DOL’sproposal.

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Read more about the DOl fiduciary rule

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As is, 45 percent of retirement plans specialists do not operateas a fiduciary to plans.

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That will change, says Cerulli.

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Fiduciary services as defined in the Employee Retirement IncomeSecurity Act “will become a pivotal offering necessary to remainrelevant in the defined contribution market,” according to a newstudy of the DOL’s rule’s consequence on retirement provider andinvestor markets.

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Cerulli’s data shows that 37 percent plan specialists operate as3(21) fiduciaries, which means they advise plan sponsors but do nothave full discretion over how plan assets are invested.

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And 13 percent now serve as 3(38) fiduciaries, meaning theyassume full discretion and responsibility for investing planassets, leaving sponsors with the fiduciary responsibility tomonitor the services provided.

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Only 5 percent serve as 3(16) fiduciaries, which means theysupply full plan administration services along with discretion overplan investments.

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Demand for all three will clearly rise if the DOL’s rule isfinalized, turning many plan advisors into fiduciaries “overnight,”and likely forcing many of those advisors with limited definedcontribution business out of the market.

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While complying with the rule’s new prohibited transactionexemptions will carry “monetary and personal costs” for advisorsand firms, the rule is not expected to slow 401(k) rollovers,contrary to some speculation, says Cerulli.

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One reason is that many large broker dealers have already beguntransitioning from commission-based compensation models tofee-based models.

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Broker-dealer firms of scale will continue to operate in the IRAmarket with “relatively little disruption,” Cerulli’s reportsays.

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Read: Broker-dealer advisor firms atcrossroads

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Furthermore, comprehensive drawdown strategies are not standardin 401(k) plans, leaving retiring workers with little choice butthe roll assets into an IRA.

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“The current inflexibility regarding withdrawals in some DCplans for retired participants is one more reason Cerulli isoptimistic about future rollover activity,” said Bing Waldert, adirector at Cerulli, in a statement.

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Cerulli’s report suggests that absence of retirement income options likeannuities in 401(k) plans will also encourage retirees to rolloverassets into 401(k) plans, regardless of the regulatoryenvironment.

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Only one-fifth of large 401(k) pans offer retirement incomesolutions, according to Cerulli.

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“While interest and willingness to discuss in-plan retirementincome products are growing, obstacles remain to more widespreadadoption,” says Cerulli.

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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.