DOL Fiduciary Rule could mean more exposure for financial advisors
According to Suzanne Miscik, vice president of retirement plan and fiduciary services for Northeast Professional Planning Group, Inc. in Red Bank, NJ, today’s more litigious society brings with it more legal exposures for financial advisors, particularly those involved in retirement planning.
In an article written by Reporter Karen DeMasters in Financial Advisor Magazine, Miscik, speaking at the Financial Planning Association of New Jersey’s annual conference, said that financial advisory firms, particularly smaller ones, are going to face more litigation risks as the details of the Department of Labor fiduciary rule are implemented.
“The IRS,” she said, “is going to be looking at the administration of retirement plans to see if everything is being carried out properly [to meet all the federal regulations]. In addition, we are becoming a more litigious society, so more retirement plan participants are going to sue retirement plan sponsors and advisors and the companies providing the plans.”
Lawsuit here…lawsuit there…everywhere a lawsuit!
Miscik who said she didn’t want to scare advisors who deal with retirement plans, advised them to be prepared, saying that lawsuits will be filed over investment choices, as well as over administrative practices, fees, and communication between plan sponsors and participants, to name only a few areas of exposure. Moreover, she said, ” the suits are flowing downstream. They are not being filed against just the big plans these days.”
As more of the work of administering retirement plans shifts to third parties, Miscik urged advisors to exercise even greater care when communicating the value-add they bring to the table to plan sponsors who may quibble over fees. She also underscored the importance of taking appropriate steps to make sure a process is in place and that their key employees are well versed in administering plans.
Care = $$$
Processes and communication are key. A retirement plan advisor may be doing everything right, but still get sued. But, those who have the appropriate processes and procedures in place, are more able to successfully defend against any allegations. The key is documentation.
Compliance is cheap! Litigation is…
…not. But you likely already knew that.
Bottom line. Be prepared. Put appropriate processes and procedures in place. Document everything. Sound like work? Maybe. But bullet-proofing your organization while keeping it on the “straight and narrow” doesn’t have to be. Let’s talk (212-233-1155). Ask about Patrina’s cost-effective and comprehensive, 8-module compliance solution and compliant data capture, file storage, and records archiving specifically designed for the financial services community. Be smart. Be covered.