Products November 17, 2016

Advicent Unveils Compliance Blueprint Ahead of DOL Fiduciary Rule

The financial technology firm’s Blueprint service features a suite of digital tools designed to help advisers and firms comply with new requirements presented by the DOL’s fiduciary rule.
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Advicent has rolled out its Compliance Blueprint, a collection of digital tools and strategies designed to help firms and advisers comply with the Department of Labor’s conflict of interest rule, which goes into effect April 2017.

The suite utilizes eight particular features to help clients meet their compliance goals.

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  • Scenario manager: The Blueprint allows advisers to present multiple scenarios resulting in different outcomes, in order to show they are acting in a client’s best interest throughout the advising process.
  • Transparent client reporting: Through a transparent reporting structure, Advicent provides a strategy that allows firms to show their clients how the recommended retirement strategy will play into their financial goals.
  • Recommendation rationale: Advicent supplies free-form text entry into a financial plan that allows an adviser to provide qualitative logic behind specific strategies, when the reasoning that drives a clients’ best interest is not easily quantifiable.
  • Complete documentation: A secure vault is offered to store collaborative documents and Advicent says it is the “only financial planning software provider with the internationally recognized standard of excellence for information security, the ISO/IEC 27001:2005 Code of Practice for Information Security Management Systems (ISMS).”
  • Compliance workflows: The Blueprint allows advisers to present a step-by-step outline for creating a financial plan, which can be used to ensure recommendations are made following the same workflow for all advisers throughout the firm.
  • Progress reporting: Advisers can compare current and past results from recommendations through Advicent reporting, thereby creating an auditable trail of previous financial plans and successful recommendations to show they were made in the client’s best interest.

In rolling out its Compliance Blueprint, Advicent also partnered with North Highland to complete an assessment of its financial planning software, and to certify it as “DOL-ready and equipped to meet the business needs of both firms and advisers.” The assessment evaluated each screen and feature presented in the user interface focusing on NaviPlan Premium and Narrator Clients, the client-facing portal offered by Advicent.

Advicent clients are now able to work with North Highland and utilize its DOL Fiduciary Foundations Playbook, which includes a risk assessment, DOL readiness assessment, adviser training, and more.

Advicent also offers the DOL Education Center in its Advisor Briefcase marketing communications tool. This Education Center contains a grouping of documents that can be shared with end-users that are curious to learn more about the DOL rule and how it impacts their financial future.

Advicent is the latest in a string of firms that has rolled out digital tools designed to help those in the retirement-services space comply with the DOL’s fiduciary rule, which is scheduled to be fully implemented by January 2018. Others include fi360, RiXtrema, AssetMark, Impact Financial Systems, and PCS.  

To learn more about The Compliance Blueprint as well as Advicent’s partnership with North Highland, visit AdvicentSolutions.com. 

Compliance November 17, 2016

Closed DB Plan Nondiscrimination Issues Focus of Bipartisan Bill

A bipartisan piece of legislation with backing in the House and Senate seeks to protect long-term participants in closed and frozen pensions.  
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U.S. Senators Ben Cardin (D-Maryland) and Rob Portman (R-Ohio), both members of the Senate Finance Committee, and U.S. Representatives Pat Tiberi (R-Ohio) and Richard E. Neal (D-Massachusetts), both members of the House Ways & Means Committee, introduced updated legislation designed to protect the retirement security of many American workers. 

The Retirement Security Preservation Act of 2016 (RSPA) amends the nondiscrimination rules that apply to qualified retirement plans to protect older, longer-service participants whose defined benefit (DB) plans have been closed or frozen. The bill builds on previous legislation and regulatory work to address this issue, and was approved unanimously by the Senate Finance Committee as part of a retirement-related legislative package in September.

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The legislators explain that over time, existing employees in the closed plan typically build seniority and become more highly compensated than younger, newer employees entering a defined contribution (DC) plan. Because the grandfathered group in the closed plan generally becomes more highly compensated, closed plans almost always end up inadvertently violating the Internal Revenue Internal Revenue Service (IRS) nondiscrimination testing rules.

This clearly is not the intended effect of the nondiscrimination rules, which were written to strengthen retirement security, rather than to force many older employees into different types of plans that may not provide enough time to accumulate sufficient benefits before retirement, the legislators say.

The RSPA addresses the problem by amending the nondiscrimination rules to protect older workers in plans that have been closed or frozen. The bill also contains anti-abuse rules related to closed and frozen plans. Treasury has proposed regulations that partially address these issues, but only for a certain subset of affected plans. The RSPA incorporates elements of the Treasury regulations and provides targeted relief to plans who are not be able to take advantage of the Treasury regulations. 

“This measure will help safeguard the retirement security of hundreds of thousands of working families who are counting on their pension benefits in their retirement,” Portman says. “There is strong bipartisan support for this measure in both the House and Senate, and both chambers should pass it quickly so it can be signed into law.”

“This common sense fix will go a long way to protect retirement and pension plans for older Americans,” says Tiberi. “The Retirement Security Preservation Act would give certainty to employers and prevent their longer-service employees from unfairly losing their pension benefits due to the IRS’s nondiscrimination rules.”

A summary of the bill can be found here.  Bill text can be downloaded here.

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