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Fiduciary Regulations and Technology

Key Discussion Topics at the Retirement Advisor Council Semi-Annual Meeting


Anticipated revised proposed regulations may not be workable

An extensive discussion of the fiduciary rules proposed by the U.S. Department of Labor (DOL) was a highlight of day two of the semi-annual meeting.  Members in all colleges engaged in the discussion of the upcoming announcement of revised rules.  Many expressed concern that new rules may limit options for sponsors and participants.  Participant education, participant counseling, asset gathering, asset retention, retirement counseling, and even the mention of an investment option may automatically qualify the plan advisor, and perhaps also the plan service provider as a fiduciary to the plan and to the participant.  These limitations are poised to impede client service.

In particular, rules may reduce the availability of participant education and communication materials, as it is expected that any mention of a “product” such as a fund name will automatically trigger the new fiduciary definition.  What’s more, some anticipate the DOL will require compliance with the new rules within eight months, a compressed schedule that is just not feasible to change hundreds of thousands of plans.  Two years is needed if most plans need new contracts.  That is a costly and time-consuming endeavor.

Technological innovation enhances Advisor effectiveness

Plan Advisors typically have access to tremendous amounts of data about client plans, participants, and investment markets.  However, there is only so much information clients can absorb to support decision making.  For this reason, plan advisors need to determine the most important data sets and how to leverage these data points in client conversations.  Simply put, advisors need to determine how they want to convey information, and—more importantly—what sponsors and participants want and need to see to support decision-making.

Advisors, plan sponsors, and their participants can also benefit from convenient video conferencing solutions. Video solutions provide scale and greater geographic reach.  Video conferencing personalizes the individual on the other end of the phone, and compels both presenter and audience to be much more attentive to the content.  The technology to leverage video conferences, save big money on travel, and streamline business is increasingly available, convenient, and reliable.  Video conferencing is just one of the many solutions enhancing plan effectiveness. Mobile technology (tablets and handheld devices) is another area of innovation enhancing effectiveness.  The bottom line is that “user experience” is all about presenting people with the information they need in the format they prefer, when and where they need it. Advisor success hinges on the ability to understand the needs of the audience before preparing tablet or paper reports for the next meeting. In many cases, a video conference can be just as effective as an in-person meeting.

Technological innovations that impact Advisor effectiveness also encompass a wide variety of social media.  Compliance requirements are often a challenge for Advisors seeking to leverage social media to enhance effectiveness.  To get started, an Advisor may act as a ‘net consumer’ of social media (think “read only” rather than active posting), and simply listen before joining the conversation.  A series of Google Alerts with words and phrases to follow companies, stocks, or even topics is a good way to start and be notified instantly or, receive a daily email digest of happenings.  One suggestion is to track all of client sponsors and prospects.  Updates about the competition and industry help as well.  Other programs that aggregate listening (or posting) include Hoot Suite and Social Mention.  

Closing thoughts

Council activities are not limited to in-person meetings.  Meetings are the source of ideas and initiatives, but activity extends to conference calls, committees, public relations campaigns, research, comments to regulators, maintenance of the advisor search RFP template, and others needed to support enhanced retirement outcomes for working Americans.

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