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Colleen Bell: Cambridge’s DOL Compliance Driver — The 2016 IA 25

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Nearly a third of independent broker-dealer presidents surveyed before April 6 by Investment Advisor reported that they were taking a wait-and-see approach to the Department of Labor’s fiduciary rule, which was released on that date. (Look for more on BD’s approach to the DOL’s fiduciary rule in the June issue of Investment Advisor.)

Cambridge Investment Research was not one of those IBDs.

Instead, last October, Cambridge President Amy Webber brought together multiple teams from within the company to discuss what it should do to prepare for the DOL’s rule, solicited its representatives’ opinions, and in January 2016, formally launched the Fiduciary Services unit at the company, headed by Colleen Bell as first vice president of fiduciary services.

Bell, a 10-year veteran at Cambridge and a former SEC examiner, said in a late April interview that in fact, “we had the concept of what has become Fiduciary Services for over four years,” and that Cambridge needed to clearly understand which of its reps would be affected by the not-yet-finalized rule and prepare the resources that those advisors would need.

“We wanted to know what our advisors needed,” Bell said, and to do so, “we needed to think like our advisors,” to prepare the resources for advisors focusing on “retirement plans and the advisory side of the business.”

That proactive approach to business is “what attracted me to Cambridge in the beginning. Listening to advisors has always made us successful,” she said. Referring to founder and Chairman Eric Schwartz, a pioneer in the fee-based business for IBDs, Bell said, “that’s what Eric has done: listen to what advisors want, run it through compliance and see if can we make money on it. I’ve taken that approach myself.”

So how will the DOL fiduciary rule affect Cambridge and its advisors? First, Bell pointed out that the clients in retirement plans are not necessarily “the wealth clients,” so serving them efficiently and profitably requires specific tools and resources.

Over all, the DOL rule “is making us think about how we do business. We will be doing business differently,” she said, but the challenge is “how do we become more efficient” internally, to do so profitably.

“The only way to [comply] is to use technology. We have the basis with our technology partners” Bell said, while WealthPort, Cambridge’s tech platform, “will become even more important to us.” Using the platform means “you don’t need to start over, but work with what we’re used to today to comply,” she said, noting that part of the solution will be eased by the fact that the “fintech companies have been very effective with integration.”

What are Bell’s reactions to the DOL rule in its final iteration? She said, “It’s important to understand the intent of the DOL” in the rule, partly by focusing on “their comments as to why they wrote the rule.” An early reading, she said, shows that “all the analysis required by the rule, all the recommendations, will have to be documented.”

Asked if there were any surprises in the final rule, Bell pointed to fixed indexed annuities being covered by the Best Interest Contract Exemption — “I’m not sure anyone saw that coming” — but in general she was “glad to see they listened to the industry” and excluded some of the more onerous disclosure requirements.

The delay in full implementation of the rule “was a positive step” as well. However, “even though we have a year, that’s still not a lot of time” to comply.

— See the full 2016 IA 25 in the May issue of Investment Advisor, and find ongoing coverage of the honorees, including extended profiles, all month on the IA 25 homepage.