White Paper - Evaluating Investor Communication Touchpoints in Response to the DOL Fiduciary Rule
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Transfer Agent Advisory Committee SUBJECTS: Compliance
Disclosure
Distribution
Operations
Recordkeeping
Transfer Agency RE: White Paper - Evaluating Investor Communication Touchpoints in Response to the DOL Fiduciary Rule
We are pleased to announce the publication of a new white paper, Evaluating Investor Communication Touchpoints in Response to the DOL Fiduciary Rule.
On April 6, 2016, the Department of Labor (DOL) issued a final rule defining who is a “fiduciary” under Section 3(21) of the Employee Retirement Income Security Act of 1974 and Section 4975(e)(3) of the Internal Revenue Code as a result of giving investment advice to an employee benefit plan, plan fiduciary, plan participant or beneficiary, individual retirement account (IRA), or IRA owner. The final rule treats persons who provide investment advice or recommendations for a fee or other compensation with respect to assets of a plan or IRA, as fiduciaries in a wider array of advice relationships.[1]
In advance of the final rule’s applicability date,[2] mutual fund complexes and intermediaries are evaluating whether certain business activities may cause them to be considered a fiduciary. Mutual fund back-office operations (e.g., transfer agent and call center areas that directly support investors) generally plan to operate as non-fiduciaries in response to the final rule and should consider establishing operational practices that clearly reinforce and represent their non-fiduciary status. They are encouraged to pay particular attention to investor communications via websites, telephones, voice response units, service centers, or in writing.
An ICI working group prepared this white paper to assist fund organizations with evaluating current categories of shareholder communications in response to the final rule. Each category of communication (e.g., fund documents, account applications and forms, correspondence, call center, website) provides questions and issues to consider when drafting communications and preparing training for service center employees. The framework used for analysis was constructed assuming a non-fiduciary status; it can easily be adapted for use by those choosing to operate as a fiduciary under the final rule.
The white paper can be obtained here and is published as part of the ICI DOL Fiduciary Duty Rule Resource Center.
The working group strongly encourages fund complexes to review all shareholder communications resources cross-functionally, with participation from all affected departments such as operations, legal, and marketing. This approach should contribute toward providing clear communication to investors that is consistent with the fund complex’s non-fiduciary status.
Questions or comments on the paper may be directed to the undersigned (jeff.naylor@ici.org; 202-326-5844).
Jeff Naylor
Director, Operations and Distribution
endnotes
[1] 81 Fed. Reg. 20946 (April 8, 2016).
[2] The final rule was effective June 7, 2016, but the general applicability date is April 10, 2017.