Note from the Publisher: What a freaking (self-imposed) mess this new rule is going to mean. In reality, advisors should have ALWAYS been putting client needs first when advising on financial matters, but we realize that is a bit naive to think that’s how things actually work all the time. On the other hand, do any of us really believe the federal government KNOWS better than those in the marketplace how to accomplish this? With MORE legislation that they will unlikely have staffing to implement? Rant will stop now.
“Capturing and processing customer data is a significant challenge with the DoL fiduciary rule. In order to comply with some aspects to the rule package, data that isn’t currently tracked and collected must be made available………
For example, if a worker moves to a new workplace and wants to rollover her 401(k), a broker-dealer will need to build a detailed ‘decision tree’ when considering which product to recommend, both for the process itself, but also to prove to regulators and lawyers that the decision was fiduciary. In some cases, manually gathering all the parameters affecting the decision could take weeks, a process some vendors are trying to automate.
About 50% of 401(k) rollovers to IRAs can be attributed to a decision by an advisor, a sum totaling about $320 billion each year, according to Yuval Zurel, CEO of FeeX, a company that uses big data to determine whether a 401(k) rollover is compliant with the new DoL fiduciary rule.”