Fiduciary Rule Updates

I have started to read the new DOL Fiduciary Rule, but received Michael Kitces’ Advisors Guide to DOL Fiduciary and the New test Interests Contract BIC Requirement in my email this week. So I began to read his 14 pages to get his take and an overview before continuing my trek through the 1000+ page rule.

Here is some information from that “Guide” that will make most RIAs happy.  The final DOL rule includes a way for advisors who receive level fees to qualify for the Best Interests Contract (BIC) Exemption without completing the full BIC.  They can qualify as a “Level Fee Fiduciary”.

The “Level Fee Fiduciary” is one whose fee or compensation received is a “Level Fee” that is disclosed to the Retirement Investor in advance.  Those level fees can be either calculated as a (level) percentage of AUM or as a set fee that doesn’t vary with the investment (for example, a retainer fee).

To qualify for the Level Fee Fiduciary exception, the advisor and the Financial Institution, and its Related Parties and Affiliates must receive only that Level Fee and not any other commissions or transaction-related compensation.

The firm is required to provide a written statement of fiduciary status, must comply with the required standards of conduct, and must still document the specific reason and validation for the rollover transaction and that the transaction was in the best interests of the client.

If these requirements are met, the firm does not have to comply with the full scope of completing the BIC agreement and the full extent of the policies and procedures disclosure requirements for the Financial Institution.

Check out the full version Michael’s “Guide” by clicking on the link above.




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