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DOL Rule Affects Advisor Searches

Though advisors and providers are more concerned about the effects that the new DOL fiduciary rule will have on their businesses than DC plan sponsors are, employers are paying attention — a fact highlighted in an upcoming survey by Fidelity. At a TRAU meeting this week, a Fidelity representative addressed how the rule is already affecting advisor searches.

Plan sponsors get really interested in DOL rules that change the way they have to run their plans. Disclosure rules like 408b2 and 404a5 had a more immediate effect on plan sponsors than the fiduciary rule will. Beyond the onslaught of media coverage, plan sponsors are paying attention primarily because the new rule changes the way that plan sponsors and their employees will interact with advisors and providers.

According to the Fidelity study, which included nearly 1,000 small and mid-sized companies, 69% of plans actively searching for a new advisor are asking whether that advisor will serve as a co-fiduciary, and 91% are concerned about the implications of the new rule. These results are dramatic and offer significant opportunities for experienced plan advisors.

As with participant fee equalization, the fact that an advisor is willing and able to serve as a co-fiduciary is an issue that resonates with plan sponsors but is usually initiated by advisors. It’s much more powerful for an advisor to respond positively to the question of whether they can act as a fiduciary than having to raise the issue themselves.

So why the increased concern? One of the less highlighted aspects of 408b2 is the question of whether the advisor is acting as a fiduciary as part of their services. That question is front and center with the new rule, which leads to the next obvious questions:


  • Is the advisor qualified to act as co-fiduciary?

  • Even if they are qualified, what insurance or assets do they have to back the claim?


Sooner rather than later, advisor RFPs will gain popularity, just as formal record keeper searches did more than 10 years ago. The DOL rule will only accelerate that trend since more liability-driven decisions require more formal and documented processes.

Opinions expressed are those of the author, and do not necessarily reflect the views of NAPA or its members.

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