10 Questions for Asset Managers Prepping for the DOL Fiduciary Rule

Posted by Admin on Mar 30, 2016 6:00:00 PM

In January, the Department of Labor (DOL) delivered its final fiduciary rule to the Office of Management and Budget for review. Also known as the Conflict of Interest rule, it updates the standards by which advisors to retirement plans operate and requires them to put their clients’ best interests before their own profits. The DOL rule is expected to be released publicly as early as March. If it moves forward, it will likely be effective before the end of the year.

If implemented, the fiduciary rule likely will fast-track other trends already afoot in the industry. These other trends include the use of automated digital advice to service small accounts and plans, the shift from higher-cost actively managed products to lower-fee passive products to address demand for lower costs, and the move away from commission-based accounts in favor of fee-based models. Leading asset managers already have been working on initiatives to address these changes by treating them as opportunities. DST kasina recently released a free whitepaper covering the implications of the rule for asset managers, which are summarized below and will be discussed in greater detail during a DST kasina webinar on March 31.

Two key rule changes will affect how asset managers do business. The first will be the expansion of regulatory authority over financial advice for individual retirement account (IRA) holders and other retirement assets. The second will be the prohibition of compensation models that conflict with the client’s best interest.

Here are some key questions that will help senior executives at asset management firms begin thinking about the best options to differentiate their firms:


Distributors, who likely will be most immediately impacted by the rule, are key business partners of asset managers. Consequently, many parts of fund complexes will be affected by changing requirements.

  • Does your firm have a team in place to manage new requirements for business planning in 2016 and beyond?
  • Are you organizing and mobilizing your teams to monitor and respond to the rule and its implications for home office support? What about work management and forecasting, digital/technology changes, business intelligence, and reporting?


The rule likely will also impact communication and compensation policies that affect relationship managers and their financial advisor clients.

  • Has your sales team met with key distribution partners to learn about possible changes to the requirements for fund company–distributor relationships?
  • Are you reviewing current compensation policies, agreements, and practices with distributors and advisors for changes that may need to be made?


Traditional and digital communications with financial advisors and investors likely will be impacted, particularly if they combine retirement education and product recommendations.

  • Is your marketing department reviewing traditional and digital communications and collateral for any adjustments needed to comply with the fiduciary rule?
  • Are you examining what changes need to be made to retirement education content and tools?


Automated advice options for future support for small plans and accounts, along with reporting requirements, will impact operations.

  • Does your operations team expect an increase in the non-advised (orphan) accounts found on your system?
  • Are your partners (including retirement platforms and transfer agents) able to provide the DOL with required reporting?

Product Strategy

Demand for passively managed, lower-cost options will continue to grow with the new rule.

  • Are your product capabilities aligned with intermediary business models once the new rule is implemented?
  • What share classes are your broker−dealers and intermediaries considering to help retain and/or grow their businesses?

Opportunities for Asset Managers

Most asset managers will have to adjust their business strategies to comply with the new rule. Beyond preparing for the new requirements, some firms already have begun adapting or developing new business models, collaborating with technology vendors and making strategic acquisitions in response to the broader trends.

Firms that are positioning themselves to thrive in the future are working closely with key distribution partners to deliver competitive products and services. They also are integrating digital portfolio-building and advice options to deepen connections with these partners, and overhauling product offerings to meet new market demands. The DOL rule will give asset managers the opportunity to communicate with clients, build interest and trust with investors, and obtain insights that will yield stronger, long-lasting relationships.

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