Vestmark DoL Poll Reveals Financial Institutions and Advisors Feel Most Behind on Technology, Advisor Compensation

Wakefield, MA - August, 4, 2016 - Vestmark, a leading innovator of advisory solutions and wealth management technology, today released poll results captured during their recent webinar exploring the impact of the Department of Labor’s (DoL) fiduciary ruling. These results highlight the different hurdles financial firms must overcome as the industry moves toward implementation.

The DoL ruling announced in April will be rolled out in phases, requiring firms to become fully compliant by January 1, 2018. Implications of the ruling are shaking up the financial services industry, affecting nearly $20 trillion in U.S. retirement assets. Financial advisors and investment managers must soon meet the DoL’s fiduciary requirements across all IRA accounts, regardless of size otherwise they need to eliminate their services to these accounts.

“The Department of Labor Fiduciary Rule and related Exemption will have a profound impact on commission based advisors and firms. Even fee based advisors and firms need to examine their business model to ensure it conforms with the Best Interest Contract Exemption. Firms need to address the cost of compliance, including the data and reporting requirements, the risks of non-compliance, and evaluate whether or not their operating model can support using the BIC Exemption,” said John Shields, Director, Navigant Consulting. “In order to prepare for the rule’s effective date, firms must evaluate their current business model, decide on the future state, determine the requirements, and create an action plan for their business now.”

Participants in the webinar and poll included more than 100 RIAs, Broker Dealers, Banks, Insurance Companies and Asset Managers and generally revealed similar feedback across channels. Participants were asked for responses during a live webinar last month, . Highlights include:

• 37% feel the most far behind in Technology, trailed by 33% who feel they lag in Advisor Compensation
• Only 9% said they felt prepared to address the DoL ruling, with 21% feeling “not at all prepared”
• In response to the question “What is your firm doing to start the compliance effort?”, 60% have put together a committee to understand the impact,15% have hired a consultant, 13% are taking direction from their custodian, and 12% have done nothing

“The costs and risks associated with managing IRAs and other retirement accounts under DoL will make it impractical for many firms to maintain them,” said Rob Klapprodt, President of Vestmark. “Numerous areas will need to be assessed such as establishing the appropriate agreements with clients, determining the advisory costs to the client and revenue arrangements with partners, and instituting the controls, oversight and auditing requirements of a fiduciary under the new DoL rule. With the right technology, firms can create a viable operating model for advising retirements accounts and improve their operations overall.”

“The percentage of firms that are behind in their technology response to the the DoL fiduciary rule is striking,” said CEB Practice Leader Peter Delano. “Firms face risky and inefficient manual approaches to compliance if they don’t catch up soon to operationalize the impact.”

Panelists of the webinar included CEB Practice Leader, Peter Delano, John Shields, Director of Navigant Consulting, and Vestmark’s president Rob Klapprodt. This online event was attended by more than 100 registrants predominantly consisting of broker dealers (38%), as well as RIAs (17%), vendors (11%), asset managers (10%), consultants (9%), insurance providers (6%), banks (3%), TAMPs (2%), Robo Advisors (1%), and others (3%). A full recording of the webinar can be downloaded from Vestmark’s website.

About Vestmark

Headquartered in Wakefield, Mass. and founded in 2001, Vestmark is a leading provider of portfolio management solutions and outsourced services for financial institutions and their advisors, enabling them to efficiently manage customized client portfolios through an innovative technology platform. Supporting over $1.5 trillion in assets and 5.5 million accounts, Vestmark is a partner to some of the largest and most respected wealth management firms. For more information about Vestmark’s solutions, call (781) 224-3640 or visit www.vestmark.com.

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