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DOL Cracks Down on Retirement Plan Advisors

A recent article in the April 2012 issue of Investment Advisor, prominent retirement planning officials warned advisors to make sure the retirement plans they advise are compliant with the Department of Labor rules, as the DOL's regulartory arm responsible for policing plans is cracking down.

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What's the biggest area EBSA is zeroing in on? Fiduciary negligence. EBSA is "seeing very high levels of non-compliance with fiduciary" duties. When the EBSA releases its reproposed fiduciary rule in the first half of this year, the rule "will affect advisors and their fiduciary role," not plan sponsors, Larson says.

Are You a Fiduciary or Not?

Kevin Watt, vice president of defined contribution at Security Benefit, agrees that for advisors, the big question now in the ERISA world is whether or not they are a fiduciary. Watt calls the issue a "seismic shift" and a "clear and present dividing line" that's occurring within firms. "You're either going to be an expert and be a fiduciary advisor named to the plan, or you're going to need to bring solutions to the table to keep you out of that role."

Because of the increased number of DOL enforcement staff, "the chance that the DOL could audit your plan is increasing," the white paper warns. "There is every indication the DOL is escalating audits of small plans," the paper says.

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