In his column in the September issue of Investment Advisor, Tom Giachetti addressed the post-transition period; specifically, the best-interest contract.
In addition to the many disclosures non-level-fee fiduciaries must make when they execute a best-interest contract with new or existing clients, advisors must also make disclosures about their website and make certain information available there.
The best-interest contract must include disclosures of the advisor’s website (discussed further below), identified via URL. The contract must also include statements that inform the client that model contract disclosures are available and updated quarterly via the website, and that a written description of the firm’s policies and procedures adopted pursuant to the Department of Labor’s fiduciary rule can be accessed free of charge through the website.
Lastly, the contract must provide a link to a firm-maintained website, which is updated no less than quarterly and contains:
• A discussion of the firm’s business model and its material conflicts of interest
• A schedule of typical account fees
• A model advisory contract
• A copy of the client’s actual advisory contract that is accessible by the client
• The fiduciary acknowledgment, Impartial Conduct Standards, warranties and disclosures discussed here
• A description of the firm’s policies and procedures that describes or summarizes key components of the material conflict of interest compliance processes
• A list of all product manufacturers and other parties who provide third-party payments to the firm with respect to investment products recommended
• A description of the above arrangements, including a description of whether and how they impact advisor compensation
• A description of the benefits provided by the advisor to such product manufacturers or other third parties
• Disclosure of the advisor’s compensation arrangements with investment adviser representatives
— Read Latest DOL Fiduciary Fight Zeros In on Advice vs. Sales on ThinkAdvisor.