I am on a flight on my way back from the 2016 WinOPS User Groups Conference in Denver for a group of BD Operations and Compliance professionals where I was invited to speak on a panel with Industry Titans, John Simmers (former CEO of the ING Advisor Network with more than 8,500 registered representatives) and Jane Reilly (President of NSCP) about the current state of DOL and what we should be doing.

In my talk I acknowledged that the DOL rules are not perfectly clear, but they are here. Although fuzzy, things are quickly getting clearer and, before you know it, firms will need to jump into ACTION!   I asked the audience how many had done an analysis of their firm's current retirement assets under management and only one person raised their hand!  I shouted out "WAKE UP PEOPLE!   DOL is here and now is the time to get into action!" Here is the Strategic Plan I shared with the attendees to get both firms and their RR's (Registered Representatives) ready for the future. I thought it would be a great topic to share with the rest of the Financial Services Community.

STRATEGIC PLAN:

Identify and Quantify AUM

• Determine what are your firm's percentage of retirement AUM (Assets Under Management).Use multiple sources to ensure accuracy of your numbers. This is your ASSET EXPOSURE SCORE. Many firms find themselves with an exposure in excess of 50%! This is especially true for BD's and RR’s with a retail focus.For many of their clients, the largest assets are  their IRA’s or retirement plans.

Verify

• Distribute the list of retirement clients to each RR for verification of the clients’ information and type of account. This will prepare you for what action will be  necessary as we gain clarity with the new rule requirements.

Make A Plan

• Sharing information with your sales force is key to getting them to accept the reality of DOL and that things will change for the future of the financial services industry. Being prepared is critical to the success of implementation. The RIA world will also change and simply being an RIA in most cases will not satisfy the rule.    

Here is a list of steps that we are taking to be prepared:

1. RIA Preparedness: Is your RIA DOL ready?   Are you registered in all the states necessary to conduct your business, especially if you are not SEC registered? Some states could take months to approve your requests, so review the states of your current book on the BD side and verify that your RIA is properly and similarly registered. WSP's for most RIAs will need to be updated in order to be in compliance with the new rules.

2. Proper Representative Licensing: For BD owners, making sure your RR's are licensed as IARs,. For those RR's who have not tested in years, this can be a daunting task. However, there are ways of getting your RR's IAR licensed without testing. For example, if they are professionally licensed such as a CPA, CFP, etc.  

3. Verification of Beneficiaries: One of the strategies RR's can adopt to enhance the daunting task of contacting all of their retirement accounts to explain the new rules is to use this opportunity to update new account forms and review and verify beneficiaries. Turn a challenge into an opportunity and they may even discover more assets in the process!

4. How to repaper all those accounts: Electronic forms and signatures are going to be the easiest and most efficient method to repapering your accounts, but nothing beats one-on-one. Even then, doing it electronically is still a good idea, we use Docupace to do our transitions and for all of our documentation. We find it extremely efficient and effective. Clients appreciate the enhanced security versus sending such sensitive information through the mail.

5. Should you consider a BICE Agreement? Many BD's and RR's are "hopeful" that the BICE or Best Interest Contract Agreement will allow them to continue to do "business as usual". That is NOT the case. Firms and RR's will be taking on more liability and will need to make major changes and then document why you do what you do and how has integrated the new fiduciary rule. 

Exactly what we are supposed to be doing is unclear, but that's the point of this post. Start with a project plan and then begin the process.   

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Steve Distante is the CEO of Vanderbilt Financial Group, an Independent Broker Dealer with a passion for Impact Investments.  To read more from Steve, click here. 

About Vanderbilt Financial Group:  Founded in 1965 and located in Woodbury, NY, Vanderbilt Financial Group is an Independent Broker Dealer known as the Sustainable Broker Dealer committed to investing with purpose. The firm offers Impact Investments in socially and/or environmentally responsible, ethical, and impactful opportunities. In 2014 the firm was recognized with the MAP Vital Factors Solutions® Presidential Award for achieving excellence through implementing the MAP Management System™ and in 2015 became the first LEED Platinum office building on Long Island. Vanderbilt’s refreshing, unique, and innovative culture is a driving force to constantly strive to positively impact their community. To learn more, check out http://joinvanderbilt.com/.