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.
- Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIAs failure to stay within the scope of the Section 28(e) safe harbor may violate the advisors fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients transactions.
The Department of Labor’s Employee Benefits Security Administration (EBSA) announced Wednesday that it was extending the interim final rule deadline on its plan level fee disclosure rule, 408(b)(2), to April 1, 2012.
Brad Campbell, former head of EBSA who’s now counsel with the law firm Schiff Harden in Washington, says that by extending the deadline EBSA is “bowing to pressure from many in the regulated community who expressed concern that there would not be enough time to comply with the likely changes in the Final 408(b)(2) rule, [which is] expected in September, if the deadline remained January 1, 2012.”
Jason Roberts, founder and CEO of the Pension Resource Institute, adds that “covered” service providers under 408(b)(2)—which includes BDs, RIAs, TPAs and recordkeepers--will now have until April 1st to provide written disclosures to their ERISA-covered retirement plan clients.
The disclosures, he explains, “must set forth the services to be provided, all direct and indirect compensation received by the service provider (and any affiliates), a statement indicating which if any services are rendered as a fiduciary under ERISA or the Advisers Act and any penalties for termination (including how any prepaid fees will be reimbursed).”
Campbell notes that the final extension rule released by EBSA on Wednesday also amends the Final 404(a)(5) participant disclosure rule to provide a new transition rule. “Though the effective date is still plan years starting on or after November 1, 2011, the first disclosure to participants will not be required until either 60 days after the effective date of the participant disclosure rule OR until 60 days after the effective date of the Interim Final or Final 408(b)(2) rule,” Campbell explains.