Technology can help advisors deal with impending DOL fiduciary rule

As it turns out, adopting the right technology can make a world of difference. Technology can help advisors in three critical ways:

Ease regulatory compliance. According to PriceWaterhouse Coopers (PwC), technology will play an important role in helping advisors comply with the business processes and procedures required under the new rule. In particular, many proposed disclosure requirements will present a challenge to firms as the vast majority don’t have relevant cost and fee information easily accessible in a central database. “Therefore, we recommend that firms begin to identify gaps in data collection and establish sources to collect fee information, including contracts, amendments and prospectuses,” says PwC, which also recommends building a new-user interface to include a calculation engine — a valuable tool to help advisors produce appropriate and timely pre-sale and post-sale customer disclosures.

Maintain profitability. Under the impending rule, advisors are questioning how they will make money managing accounts for smaller clients. The right software can make advisors more efficient, driving down costs and avoiding losses.

Ensure fiduciary responsibility. Under the new rule, advisors must demonstrate that their advice is in the best interest of each client. Financial planning software can help advisors better understand their clients by gathering and aggregating their personal and financial information to create a clear customer profile, and guide clients to the right products – as well as supporting the advisor’s fiduciary position by documenting the rationale behind each recommendation.

In short, a combination of technology tools – including risk assessment, portfolio management, and customer relationship management (CRM) software – can make the impending shift much more manageable for advisors as they prepare for DOL legislation.