More On Legal & Compliancefrom The Advisor's Professional Library
- 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.
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
Great West Retirement Services announced Aug. 11 that it has created a template to help advisors comply with the Department of Labor’s 408(b)(2) fee disclosure rules.
The template will be available in November following a 90-day period in which the firm will educate advisors, sponsors and staff on how to utilize and read the document, Charlie Nelson, president of Great-West Retirement Services, told AdvisorOne on Tuesday.
“One of our goals was to not only meet the fee disclosure requirements but to also meet the spirit of the requirements in the most thorough way possible,” Nelson said in a statement. “With that goal in mind, we combined almost all fee disclosure information into a single, comprehensive document, and even disclosed certain fees not required by the new regulation.”
The template also shows fees in dollars and percentages rather than formulas. A summary of fees and a detailed breakdown by category are also available, Nelson said.
“Current regulation does not require disclosure of two types of fees,” Nelson told AdvisorOne. “One is the insurance company general account which is the fixed investment option in a 401(k). The other is the self-directed brokerage fee. We feel that all those fees, like every other fee, should be disclosed to the plan sponsor. We continue to work with non-affiliated organizations and certain self-directed providers to encourage them to provide that type of disclosure.”
Many successful service-based firms like doctors’, lawyers’ and dentists’ practices utilize self-directed brokerage options in their 401(k)s, Nelson said. Without disclosure of those self-directed fees, they’re not getting full disclosure.
DALBAR Inc. provides independent third-party certification on the template, according to Nelson. “Plans may hire a consultant to verify that their plan meets the new requirements,” he said. “However, the reviewer often has a previous relationship with the plan. In contrast, DALBAR is an independent third party that doesn’t have a vested interest in the evaluation. This gives plan fiduciaries additional comfort knowing that the template provides them the information they need to meet their plan fiduciary responsibilities.”