Eric Clarke, founder and CEO of Orion Advisor Services, warned firms against applying a technology “Band-Aid” to comply with the Department of Labor’s fiduciary rule.
“It’s easy as a technology provider to…kind of pick at a wound and apply a Band-Aid, but that [technology solution] might not even apply towards helping them comply with the DOL rule,” Clarke said during a visit to ThinkAdvisor’s New York offices. “I read a lot of these articles about how technology solutions are helping advisors comply with the DOL and I’m like ‘I don’t even think that’s really my interpretation of the DOL rule.’”
Clarke founded Orion, which is known for its integrated portfolio accounting system, in 1999, and the company now services more than 800 firms with $315 billion in assets under management. In addition to portfolio accounting, the fintech provider’s other main functions include trading and advisory fee billing, as well as additional technologies like client portals and mobile apps to help advisors stay on par with robo-offerings.
Clarke urged advisors not to buy into the “propaganda” about the DOL rule.
“They’re saying ‘you need to buy this technology widget to comply with DOL, and we have the only one that does this,’” Clarke said. “I’m like, ‘I don’t even see how that widget complies with [the DOL rule].’”
Rather, Clarke stressed the need for advisors to first spend time with their chief compliance officers or compliance consultants to “find out how the DOL [rule] really impacts their business specifically.”
Then, he added, advisors can ask when they can do from a technology perspective to make sure that they’re in compliance.
While technology may not be the be-all, end-all solution to comply with the DOL rule, Clarke noted that some tools will undoubtedly help clients comply.
“There are some good technology solutions out there that I’ve seen as far as document storage—having your clients sign off on those [Best Interest Contract exemption] agreements. Those kinds of things are going to be important for clients to use,” Clarke said.
As for other tools, like onboarding and risk assessments, Clarke said he is skeptical of how they will impact advisors’ DOL compliance.
“I don’t know if those [onboarding tools and risk assessments] are going to help advisors comply with the DOL or not,” Clarke told ThinkAdvisor. “It depends on the process and the workflow and how the advisor engages with the client. Those are great tools—they’re awesome—I just don’t know specifically how it’s going to help comply with the DOL rule.”