As I’ve absorbed all the noise and information surrounding the DOL Fiduciary Rules, the age old joke about eating an elephant has often come to mind. Numerous times in my life I’ve taken on tasks or assignments that seemed daunting and intimidating. In these times I’ve learned the importance of breaking things down into smaller pieces and tackling one at a time.
I’ve also thought that if I really did need to eat an elephant, I’d come up with a smarter way, which for me would mean inviting friends, family, co-workers, neighbors, the village, the tribe… Together it would be a lot easier than doing this alone.
Comparing the steps of eating an elephant* to maneuvering through the DOL Fiduciary Rules looks something like this:
1. Get the elephant – Receive the DOL Fiduciary Rules
2. Cut meat into steaks and marinate – Study and research the rules
3. Plan for the feast – Develop an action plan
4. Present the meal – Introduce the changes to adhere to the rules
5. Eat – Implement the plan
For most advisors, these are the steps your broker dealer will go through. But if you are your own RIA, or if you work in in the home office of a firm like I do, then these steps provide a great outline.
By now, your firm should have gathered the people together, including ERISA consultants, strategic partners, and key individuals within their office. The cutting and marinating part is done. In other words, research and education should be complete.
In the coming months, action plans should be finalized and specific details of those plans should be introduced to their advisors to outline the following:
· Existing accounts: Delivery of required documents to variable compensation (commission-based) accounts, fee-based accounts, ERISA plans, and more.
· New clients: Changes to paperwork in order to adhere to the new rules.
· Rollovers: Introduce Distribution/Rollover forms that will require a lot more details advisors will need to collect than they have in the past. Specifically comparing the services, funds, fees, and who pays those fees in the existing plan to the services, funds and fees of what the advisor is recommending. Then show that the recommendation is in the best interest of their clients and compensation is reasonable.
· And much more…
Your firms should be hard at work preparing for the feast of the “DOL Elephant.” You will all be invited to join in this adventure. Stay tuned and bring your appetite because the party is going to be big!
* Pardon the comparison and my apologies to PETA. I really don’t plan on eating an elephant.