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IPA Connection: Preparing for New Regulations Part 1

By February 29, 2016No Comments

The financial services industry continues to brace for a year of extraordinary regulatory changes. Clearly, the Department of Labor’s Fiduciary Rule is at the top of any list of issues that impact financial advisors. But the Fiduciary Rule is not alone on that list. Updates to customer account statement valuations, continuing implementation of the JOBS Act and other legislation will continue to impact your practice throughout 2016.

And while the immediate consequences of these regulatory changes are often quickly discussed and understood, it is the second degree of consequences that often create difficulty upon implementation. In this 3 part series we will look at some of those less commonly discussed consequences and how they may impact your practice.

Administrative Process Changes

Successful advisor practices typically have well articulated and communicated processes. When a client invests new assets in one of your recommendations, everyone in your office understands their role in processing the application, taking custody of funds and client follow up.Now is the time to review those processes. For instance, the DOL Fiduciary Rule will require another layer of disclosure and client consent.  Review your client onboarding procedures and add these additional documents to be completed alongside variable annuity or direct participation program disclosures. It might also go alongside your AML disclosures or any HIPAA consent you may receive from clients.

For FINRA’s Customer Account Statement Rule changes, simply amend how you review statements with your clients. Maybe you show clients samples of your statement or perhaps bring clients back when they receive their first statement. Either way, include necessary talking points and examples specific to direct participation programs as a way that enhances your client’s experience.

Regulatory change is upon us. With opportunistic preparation, far from being a hindrance, these changes can deepen client relationship and provide a competitive advantage to your firm in 2016 and beyond. A fresh look at your administrative procedures is a great place to start.