The New Fiduciary Rule and You

By Kate Young

Two weeks ago, the Labor Department released its final rule redefining who counts as a fiduciary under the Employee Retirement Income Security Act and Internal Revenue Code. Since the April 6 release, bankers, compliance officers, and marketers have been scrambling to adjust to upcoming changes.

The rule applies to specifically to financial advisors who support qualified retirement plans and IRAs. In the past, these professionals were required to meet the standard of suitability—that is, any investment advice they gave to clients had to be suitable for that client’s personal circumstances. The new rule requires that financial advisors meet a fiduciary standard. In other words, their advice must be not only suitable, but also in the client’s best interest.

Weighing in at over 1,000 pages, the new Fiduciary Rule has broad and cascading ramifications for everyone in the financial services industry. Banks will be facing significant and potentially costly compliance challenges.

But what does it mean for marketers? For one thing, you will need to change the way you talk about your bank’s retirement planning business. Customers may start to view retirement planning in a brand new light, and that could mean new opportunities for marketing. The narrative behind financial advice is about to change, and going forward, you will want to rethink how you promote the affected products and services.

To help banks make sense of the Fiduciary Rule, ABA is offering a Briefing on May 25, 2016, which will cover:

  • An overview of Fiduciary Rule’s impact on the banking industry
  • Custodian banks, directed trustees, and exemptive relief
  • Issues and challenges for community banks

The dust is far from settled on this transition. We’ll be following it with interest, and reporting on developments in the marketing world as they occur.