What, Where, Who, Why, When, How-written with Direction board

Content provided by Mike Forker, CLS Chief Compliance Officer

The US Department of Labor (DOL) has issued the first set of Frequently Asked Questions (FAQs) concerning the DOL’s new fiduciary rule.  These FAQs seek to clarify issues for service providers to ERISA covered accounts related to the Best Interest Contract Exemption (BIC Exemption) and other exemptions.

Overall, the FAQs confirmed CLS’s current thinking on the fiduciary rule, but there was one interesting note that is a frequent topic when we discuss the rule with advisors.  The DOL clarified that the fiduciary rule and the “level fee” requirements under the BIC Exemption do not require you to charge all clients the same fee.  If you provide different levels of service to different clients, you can charge different fees.  Additionally, you can give discounts to certain clients, assuming you have a valid reason for the discount.  Examples cited by the DOL include the size of the client’s account, the length of time the individual has been a client, or the desire to attract a client or start a new line of business.  Stay tuned for additional guidance.