Whatever you may think about John Oliver, he’s a great process improvement specialist. In just a few sentences, he recently summarized an entire retirement funding strategy that works for many people:

1. Start saving now -– or ten years ago
2. Low-cost funds are the best way to go -– invest and leave it alone
3. Ask if your adviser is a fiduciary; if the answer is no, run away
4. As you get older, shift your investments from stocks to bonds
5. Keep your fees under one percent

As with many of Oliver’s other particular hobbyhorses, the wealth management segment brought a whole lot of attention to what had previously been thought of as a dry topic.

One item in particular caught a lot of attention: the fiduciary rule, which requires that wealth management specialists in the retirement area must be fiduciary advisors and have a client’s best interests at heart.

What the DOL Fiduciary Rule Really Means for Wealth Management

As Oliver brought to America’s attention, the widely-anticipated Labor Department changes to how financial advisors can counsel clients on retirement assets (commonly called the DOL rule) will begin to take effect in a year. This new conflict-of-interest—or fiduciary—rule requires all professionals to recommend what is in a client’s best interest when providing advice on 401(k) assets, individual retirement accounts or other qualified monies saved for retirement.

“A non-fiduciary advisor merely must make sure that an investment is suitable for you, which leaves the door wide open for a lot more potential conflicts of interest,” writes Pam Krueger in Iris Advisor. “That’s because many brokers and other non-fiduciaries are incentivized to sell you investments that generate fat commissions, whether or not the investments are in your best interest.” In fact, she writes, the White House Council of Economic Advisers estimates that U.S. consumers waste $17 billion every year on fees paid to advisors.

With 50% of US financial assets held in retirement accounts—$3 trillion of client assets that generate $19 billion of related revenue, according to a Morningstar research report—the impact of the rule will be widespread across insurance, wealth management, asset management, broker-dealers and banking and capital markets.

While some types of wealth management specialists had been required to be fiduciaries before, the new rule greatly expands them. The rule was proposed by the Department of Labor in 2010, rescinded, and then finalized on April 6. The House of Representatives passed a bill on April 28 to remove the rule, but the bill was vetoed by President Barack Obama on June 8. While Congress attempted to override it on June 22, the effort fell short. Consequently, the rule took effect on June 7, and generally becomes applicable on April 10, 2017, while the remainder will apply on January 1, 2018.

Basically, the rule means that many wealth management organizations will need to convert their customer-facing agents to flat-fee rather than commission-based staff, following one of several compliance paths.  “What makes the U.S. Department of Labor’s (DOL) ‘fiduciary rule’ so transformational is that unlike most regulations which have a major cost and operational impact, the DOL rule package will also have a material impact on the front office,” writes Manisha Kimmel for Thomson Reuters.

And while wealth management organizations can still sell commission-based products, many compliance documents will now be required. “Implementation will require not only familiarity with the new fiduciary definition, but a search for relief among the various prohibited transaction exemptions—including the new Best Interest Contract Exemption—that might permit some existing practices to continue, if the applicable conditions are met,” writes the Thomson Reuters EBIA Weekly Newsletter.

Automating Crucial Compliance Processes

Oliver’s attention to this particular rule is being felt in a number of wealth management organizations, as people who wouldn’t have known a fiduciary rule from a hole in the ground are now coming in demanding to know about the organization’s fiduciary policy.

For advisors and COOs, anxiety around the DOL rule is driven mostly by the fear that operational models will have to be completely reworked—at massive cost to their bottom line.

Converting commission-based agents to fiduciaries, and then setting up new policies for how they should operate, offers wealth management organizations the opportunity to look at their processes and see how those processes can be improved, while ensuring that whatever new steps that are required to implement the new rule are followed.

Krueger, for example, suggests a number of steps to consumers to ensure that their financial advisors are fiduciaries, such as

  • Having the fiduciary status in writing
  • Determining whether the agent is paid on commission
  • Having all expenses and fees in writing
  • Determining the custodian for the funds
  • Offering references, either directly or by giving prospective clients their Central Registration Depository number so they can research the agents themselves

Using an enterprise content management (ECM) solution, each of these items could be added to a “new retirement customer onboarding” process to make sure they’re all accomplished.

Other ongoing documentation may also be required—another process where an ECM solution can help. “In all cases, the advisor will want to retain documentation of compliance with this new rule, including contracts, policies, procedures, and disclosures, to support your Books & Record requirements,” Michael Conlon recommends to compliance officers in Advisor Assist.

“As a best practice we recommend that even firms without commission or revenue sharing fees should provide notice to retirement clients that they are providing their services in the client’s best interest to uphold their fiduciary duty and review and update disclosures of any potential conflict of interest,” Conlon adds.

When it comes to automating compliance processes, there a few factors to take into consideration:

  • Integrating primary applications such as a customer relationship management (CRM) with an ECM system lets advisors collect business-critical data and gain insight into their organization’s processes. In fact, a previous InvestmentNews study found that firms with integrated primary applications had higher revenues, profits, and assets under management than those with limited technology investments.
  • Tools for batch processing handle tasks across numerous portfolios at once, making ECM a way to manage a large volume of accounts. For example, advisors can use an integrated CRM and ECM system to create letters to send to clients about market shifts, then log them for compliance review.
  • E-Forms and workflow automation software enforce rules during processes that require multiple steps to be performed for compliance purposes. For example, Semper Augustus Investments developed a 25-step process using its ECM system’s e-forms software, modeled after its portfolio composite software user manual, to ensure fair representation of calculations and disclose investment results. The automated process serves as a checklist and instruction manual for Semper Augustus employees.

It’s always a double-edged sword when Oliver zeros in on a particular marketplace. But advisors who look at it as an opportunity to streamline operations using technology will only end up ahead.

To learn more about how enterprise content management technology can help build an agile and nimble operation, download this complimentary InvestmentNews whitepaper, Eliminating Five Common Advisory Firm Bottlenecks.


Simplicity 2.0 is where we examine the intricate and transitory world of technology—through a Laserfiche lens. By keeping an eye on larger trends, we aim to make software that’s relevant to modern day workers, rather than build technology for technology’s sake.

Subscribe to Simplicity 2.0 and follow us on Twitter. If what we’re saying piques your interest, head over to Laserfiche.com where you’ll see how we apply the lessons learned on Simplicity 2.0 to our own processes, products and industry.

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