More On Legal & Compliancefrom The Advisor's Professional Library
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
The Department of Labor’s Employee Benefits Security Administration (EBSA) has given industry trade groups until Feb. 24 to fulfill the department’s request regarding what impact the conflicts of interest faced by brokers who advise on IRAs have on IRA investors.
The EBSA recently launched an expanded “regulatory impact analysis” to assess the impact of the department’s reproposed fiduciary rule on ERISA plans and IRAs. Industry trade groups were asked by EBSA’s Office of Policy Research on Dec. 15 to voluntarily assist EBSA in its fact-finding mission.
Applying a fiduciary standard to IRAs is one of the more controversial aspects of the reproposal.
Industry trade groups recently received a letter from Joseph Piacentini, director of EBSA's Office of Policy Research, stating that EBSA would like to receive any data the trade groups had by Feb. 17. But an EBSA spokesman told AdvisorOne on Thursday that EBSA had extended the period for response to Feb. 24. This correspondence, the spokesperson said, “is part of a larger dialogue which the department is pursuing to ensure that it has the best available data to support its assessment of the economic impacts of the initiative.”
But industry trade groups say they are limited in what information they can provide.
Susan Waters, CEO of the National Association of Insurance and Financial Advisors (NAIFA), told DOL in a Feb. 17 letter that because of the nature of NAIFA's membership, "it is not feasible for us to obtain any of the data enumerted in your December 15, 2011 letter. The relationship of our members to their clients and affiliated companies is such that they would not have the right to share the clients or company’s data even if they have some access to it." NAIFA would, however, she said, "be pleased to answer qualtiative questions about the diverse ways in which our members serve their clients, and the motivations involved in their relationship-driven business model."
Lillian Vogl, director of Federal Relations for the NAIFA, told AdvisorOne after the trade groups met with EBSA on Jan. 24 that while NAIFA is “encouraged” that “DOL is trying to perform a very thorough data collection, there are inherent difficulties in providing a comprehensive view of a person’s financial decisions in the way [DOL] would like to have.”
Despite the difficulty in getting such data, however, Vogl says the DOL “made it clear that they want to move forward quickly,” and wants to know what information the trade groups’ members can provide.
The groups—which included the Financial Services Institute, NAIFA, the Financial Services Roundtable, the Securities Industry and Financial Markets Association, the American Council of Life Insurers, the Insured Retirement Institute and the American Bankers Association—told EBSA in a Jan. 12 letter that it would be impossible for them to provide the data to DOL by the original Jan. 15 deadline and requested the Jan. 24 meeting to “clarify and refine” DOL’s original request so they could reach out to their members to determine what information the industry is able to provide.
Vogl told AdvisorOne that the problem is that DOL is trying to compile “very detailed statistics about individual account attributes, like how [account holders’] advisors got paid, if people received advice—all sorts of demographic information about them.” However, she says, there’s no “way to provide that [data] in a systematic way,” one reason being that people may have multiple accounts—in IRAs and 401(k)s—“and there’s no way to connect across, especially for privacy concerns, their Schwab account with their Merrill Lynch account,” for instance.