There has been much ado about the impending Department of Labor fiduciary rule. It’s the hot topic at conferences and has been widely discussed in industry publications. Despite all this, there remains a large degree of uncertainty about exactly how the final rule will affect financial professionals. After the presidential election, the future of the rule seems to be even muddier. Nevertheless, the industry has been bracing for a change that will shift how many operate.
People in our industry appear to be of the same mindset: First, they believe the DOL rule will be implemented in some form. Second, they believe that even if the DOL rule is killed, the enhancements to transparency and fiduciary responsibility are becoming the new normal. Firms are changing procedures, training staff, and updating technology – all to fall in line with the proposed rule. In the very near future, those without these improvements will be at a competitive disadvantage with clients and compliance officers.
We don’t need to get into the specific procedures DOL is proposing, but it is important to note that the underlying message of the DOL rule is that clients need more transparency and advisors need to adhere to a higher fiduciary standard. DOL is changing what will be expected for all financial professionals when it comes time for an audit or lawsuit – and that’s the kicker. Advisors will have to maintain records that show they acted at all times in a fiduciary capacity.
So what is an advisor to do? Here are just a few suggestions for how Grendel can help:
TAKE NOTES AND PROVE WHEN THEY WERE ENTERED AND BY WHOM
One of the easiest things to do is also one of the most powerful. Record your interactions with clients using notes. In ADVISOR, when you’re working with any event or note, the system records the user who wrote the note and when – and this cannot be changed or faked by the user. This allows Grendel to prove that you recorded those thoughts on that specific date and they have not been altered since. This can go a long way to establishing a pattern of behavior – important to protecting your good name and reputation.
TRACK PRODUCT RESEARCH
Grendel’s PRODUCTS functionality allows you to track your research on the products you are recommending. You can also track research on products you are NOT recommending – something that is getting more attention during audits.
BUILD IPS IN GRENDEL, HAVE CLIENTS SIGN OFF, AND HAVE GRENDEL AUTOMATICALLY FILE THEM
When dealing with suitability, it’s good advice to work with investment policy statements. Better advice is to have your clients sign off on your mutually agreed upon path. Grendel allows you to build IPS and create multiple versions for each client. You can then digitally deliver your IPS to your clients where they can digitally sign off on them using our partnership with SIGNiX. Once the client signs off, the IPS is automatically stored in Grendel’s file archive. As with much of the Grendel platform, the date the IPS was created and stored is locked in and cannot be altered. Further, the IPS should be shared with the client in GRENDEL CLIENT.
Transparency is key. You need timely information available to your clients whenever possible. Not only do more clients expect this, but more compliance departments do as well.
In ADVISIOR, you’re already taking good notes on your meetings, thoughts, and research. You can selectively share those notes by making specific notes available to the client. We know you don’t want to show your clients everything, so the system lets you be very selective about what you make visible to your clients. So, once you decide what to share with your clients, they will have instant access to the thoughts you want them to see. This level of transparency puts you far above the competition.
One aspect of the DOL causing the most brouhaha is the infamous BRAC form. This is a key argument with the new legislation and compliance offices are already starting to mandate these documents are made available through a client portal. As with any file in Grendel, you can easily share these documents through CLIENT – as with the IPS discussed earlier. Even more, Grendel records your clients actions with the files allow you to show that your client viewed specific files.
All clients’ accounts, including those held away accounts can also be made visible through CLIENT. This helps round out the power of transparency in your relationship.
Standardizing workflows is a problem that Grendel COMMAND solves neatly. What should an advisor do during an annual review? How should an advisor handle a rollover? What is the best practice for a surprise audit?
Grendel COMMAND allows you to build complex workflows and make them available to any ADVISOR underneath your umbrella. The system is flexible enough to allow for advisors to make the processes their own so as well – giving them the ability to add or modify to suit their practice.
STANDARDIZE AND DISTRIBUTE PRODUCT RESEARCH
Knowing what products are ok to use and which are not is a critical step in making investment advice. Advisors often rely on a home office or other supervisory structure to help give advice in this area. COMMAND allows for this information to be instantly available through the native PRODUCTS functionality for all advisors you grant access.
AUDIT BEHAVIOR AND DATA
When used as an enterprise solution, COMMAND allows you to get a birds-eye view of all users’ behavior. This can show patters on things like note taking or login behavior. Everything can be tracked at the enterprise, advisor team, individual, or even client level. You can track your internal DOL policies and ensure they’re properly followed without having to perform time consuming and extensive audits.
No solution can currently solve everything for the DOL – it’s simply too nebulous to pin down yet. However, most experts agree that CRM is the cornerstone for the proper data management needed in the new DOL and beyond world.