RiXtrema's DOL Fiduciary Rule Checklist Tells Advisors What They Need to Do Now

Advisors Answer Specific Questions; Can Ensure Regulatory Compliance

RiXtrema's DOL Fiduciary Rule Checklist Tells Advisors What They Need to Do Now

RiXtrema, the leading provider of risk management tools and analysis to the financial advisory and broker/dealer community to help ensure that investors get the analysis and advice they need, announced the launch of its DOL Fiduciary Rule Checklisk. “Every advisor who advises on retirement account assets as of June 9, 2017, is effectively an ERISA fiduciary who must adhere to Impartial Conduct Standard and charge no more than a reasonable fee,” explained RiXtrema President Daniel Satchkov. “It’s essential that advisors understand this and take necessary action to comply with the rule.”

In addition to the requirements that ERISA fiduciary status implies, the DOL Rule also contains requirements for very specific documentation regarding investor’s best interest. The Best Interest Document must follow DOL requirements and contain specific data points regarding both the retirement plan and the IRA account. These data points will show whether a rollover or IRA-to-IRA transfer is in the best interest of the investor.  The Checklist contains seven sections dealing with various requirements of DOL Fiduciary Rule best interest documentation. Each section contains detailed specific questions with references to legislation or DOL FAQ. By going through the Checklist advisors will know exactly where they might fall short and how to fix the problem.

The DOL Fiduciary Rule stipulates that any rollover (whether level fee or not) is considered to be a “prohibited transaction,” thus any advisor who onboards IRA assets, since the promulgation of the rule on June 9, 2017, is required to document why the rollover is in the best interest of the investor. Specifically, the DOL has said: Although the documentation requirement is only specifically recited in the level fee provisions of the BIC Exemption, the documented factors and considerations are integral to a prudent analysis of whether a rollover is appropriate. Accordingly, any fiduciary seeking to meet the best interest standard as set out in the exemption would engage in a prudent analysis of these factors and considerations before recommending that an investor rolls over plan assets to an IRA or other investment, regardless of whether the fiduciary was a ‘level fee’ fiduciary or a fiduciary complying with the full BIC Exemption.

There are seven sections in the questionnaire:

1.     Consideration Of Fees And Expenses Associated With The Existing Plan

2.     Consideration of Investments, Fees And Expenses Associated with the Proposed IRA

3.     Consideration of the Levels Of Services and Investments Available in a Rollover

4.     Considerations of Risk Suitability

5.     Objectives & Needs, Suitability Continued

6.     Consideration of The Levels of Services and Investments Available Under the Existing Plan

7.     Fee Reasonableness

Questions in Section One include:

·      To satisfy this requirement, do your calculations include the fees of all of the types of investment vehicles in the current retirement plan portfolio, including Collective Investment Trusts, Separately Managed Accounts, Group Annuities?

·      To satisfy this requirement, do you make and document a prudent effort to obtain the latest form 404(a)5 disclosure with the plan admin fee information?

·      If despite prudent efforts you were not able to obtain a form 404(a)5 disclosure, do you use an exhaustive database of form 5500 filings, that gathers all fields both from Schedule I and Schedule H, where appropriate?

·      If plan admin fee data is not available on the form 5500, do you have a documented and frequently updated benchmark for plan fees?

The Checklist is complimentary and available for use by anyone. Once the advisor has completed the checklist and is clear as to the remaining obligations, he or she has the option of using RiXtrema’s IRAFiduciaryOptimizer to create best interest documentation that addresses the DOL Rule requirements. The comparison highlights a variety of measures such as fees, track record of the investments, risk vs. risk tolerance, and best fiduciary practices. The tool then produces a report summarizing why a rollover is in the best interest of the client.

“We can’t state forcefully enough that advisors must be fully engaged in complying with the rule,” added Satchkov. “While there continues to be talk of delays in some areas of the rule, none concern the area addressed in the above DOL comment. Advisors who are not addressing this issue may incur liability due to ‘private right of action,’ which means that private parties can bring lawsuits as implied by the effective ERISA fiduciary status. Various delays by the DOL are distracting advisors, but it is important to understand that delays do not touch the core of the rule, which is fully in effect as of June 9, 2017. We are seeing that many advisors are starting to understand the landscape and the serious nature of their obligations. As a result, we are experiencing strong adoption of our IRAFiduciaryOptimizer by advisors wanting to ensure compliance.”

 To go through the DOL Fiduciary Rule Checklist, visit www.DOLrulechecklist.com. For information about the IRAFiduciaryOptimizer, visit https://rixtrema.net/irafiduciaryoptimizer/index or contact RiXtrema at 212-513-7070.



Founded in 2010, RiXtrema is the first company to make sophisticated quant algorithms work for investment fiduciaries. RiXtrema built a FiduciaryOptimizer suite of products including 401kFiduciaryOptimizer to help plan advisors grow their business, IRAFiduciaryOptimizer for best interest rollover reporting, AnnuityOptimizer for annuity analysis and Target-Date FiduciaryOptimizer scheduled for release in September 2017. The RiXtrema research team received the 2015 Peter L.  Bernstein award, one of the most prestigious awards in finance, for its article Risk Estimation and Hedging: A Reverse Stress Testing Approach, published in The Journal of Derivatives in April 2015. For more information, visit www.rixtrema.com.


Leslie Swid
Impact Communications
(913) 649-5009

Source: RiXtrema


Categories: Compliance and Regulations, Financial News, Regulations and Compliance

Tags: 401kFiduciaryOptimizer, Daniel Satchkov, DOL, DOL Fiduciary Rule Checklist, ERISA, fiduciary rule, RiXtrema

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