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Why the DOL Rule Is Great News for Your Retirement Practice

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Thanks to the Department of Labor, you can finally get paid for 401(k) advice

The summer of 1999 was when I opened my first investment advisory account for a company 401(k) retirement plan participant. Six months later, I left the broker-dealer world and opened an RIA firm in order to get paid for the advice. Since that time, I have been teaching, writing and cajoling investment advisors from all over the United States to give strong consideration to providing investment advice to their existing individual company retirement plan participant clients.

Do you have any clients that are currently employed? If so, the new Department of Labor rules announced last week will finally encourage investment advisors to start providing a fiduciary level of investment advice to their clients with company retirement plan accounts.

Read the headlines or the summaries of the new rules. But don’t come to the same boring practice management conclusions as everyone else in your firm.

Fiduciary investment advice for an IRA will soon be the standard. The new best interest contract spells out legal liability for fiduciary violations. 

Don’t let this kind of language scare you. There is a huge investment advisory opportunity that comes from the new Department of Labor rules. Become the fiduciary investment advisor of record for existing clients company retirement plan accounts now. This is a decision that your client makes; not the company retirement plan sponsor or provider.

Time to Get Paid

For years, I have heard in person, on the phone or read in an e-mail from investment advisors who have several clients that he or she provides “free” advice on their company retirement plan account menu.

If I had a nickel for every time I have heard about that arrangement with key clients and their advisors, I would not have time to write this article.  I would be too busy with the intricate design of my custom-built yacht. No more free company retirement plan advice for clients.  If I knew how to set up a hashtag with that phrase on twitter I would.

Simple Process

Ask your best clients for a copy of their current company 401(k) retirement plan menu of options. Next ask them for a copy of their most recent quarterly statement for that same account.

Then ask for the same information from their spouse or partner. Finally, spend the rest of the spring and summer asking the same two questions of every person you come in contact with.

You can now manage your clients’ individual company retirement plan account and get paid for the investment advice. You just have to figure out how your current broker-dealer or RIA employer can set up the disclosures and advisory agreements.

There is some great investment management and investment advisor technology available right now to build your individual company retirement plan participant advisory niche. I exclusively use one company now, and I am in the beta test for another one.

Future Steps

Going forward, investment advisors are going to have to prove that an IRA rollover from a company retirement plan account is in the best interest of the client. Don’t panic about these new rules like the rest of the investment advice world.

Right now, start a marketing plan to establish yourself as a fiduciary investment advisor on your client’s existing company 401(k) retirement plan account. When the IRA rollover topic comes up, you will be covered. Let the rest of your local investment advisor types scramble for the account that you already manage for a fee.

What’s a couple more forms or disclosures to get signed? Your individual client company retirement plan investment management marketing plan will save hours of stress and headaches later.

What do you think? Teak or cherry wood for the deck rails on my yacht?