Fiduciaries Among Us

Fiduciaries Among Us

The new day has dawned and now we’re ALL fiduciaries. For the retirement plan advisor community, it’s proven to be a lot of hype about nothing at all, really. The final regulations that came out within the last month or so, with a few exemptions, basically made everything you do a fiduciary action. Will this add more work to your day? Will there be some documentation you need to change in your day to day interactions with clients? Most certainly. The DOL’s message is pretty clear: all your actions are to be in the best interest of clients, and you’re going to be accountable for those actions now going forward. It gives one pause, yes, but it also creates a good opportunity to put some focus in your practice. You need to tighten it up now anyway, so why not make a better business model out of this opportunity— for that is what this is.

One practice I’ve come to appreciate with the retirement plan advisors that really focus on this industry: they need to be very specific in their approach to plans. Everyone starts off in this business being all things to all people; when you get serious about managing a retirement plan practice, you realize you simply cannot sustain a model with that kind of chaos. The focused advisors generally have a very slim pool of providers with which they work. This enables them to both be more efficient, and to cultivate accountability; you know who and where to go to fix things.  I think the new fiduciary regs will act as a catalyst to make all of us see the world a little more clearly: like the focused advisor practices I mentioned, we’ll migrate to firms that can make us more efficient. This kind of focus, by the way, is what makes it easier for these advisory practices to document and review their actions; it makes getting to this accountability endgame that much easier.

Every change like this can create opportunity, and I believe that this one certainly has done so. In our initial reading of the new regs, it is clear that advising a client to use a third party investment manager does not absolve you of your fiduciary role in this recommendation. Does this change if you’re not touching the investments at all? For example, what if you recommended a Plan Administrator that will be hiring/firing the 3(38) Investment Manager; how does this play with the new regs? And what about recommending a client to a model like ours? Does recommending a client to a pool as large as TAG’s exempt the advisor of the fiduciary role anyway? These are ambiguities that, perhaps, fit well into the discussion of making your practice simpler.  

In the end, it really is about making your practice more efficient. The new regs give an opportunity for all of us to revisit our documentation practices and the ways we communicate the role(s) we play. This also give us the opportunity to look into models that can make us more efficient… and that is where TAG comes in!

Stay tuned— we’ll be writing more on this soon.

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