Since the Department of Labor released its final fiduciary rule in early April, ERISA guru Fred Reish has been answering questions from existing clients at all hours of the day and night, and his client roster is ballooning.
That's not surprising, really, for an attorney who's been steeped in ERISA law since "before there was an ERISA," he likes to quip. Reish started practicing pension plan and retirement plan law in 1972. "Things were much simpler then, and [retirement advice rules were] primarily driven by the Internal Revenue Code, not by ERISA," which was enacted in 1974.
Based in Drinker Biddle & Reath's Los Angeles office, Reish serves a nationwide clientele — 90% of which are east of the Mississippi River — that includes hedge funds and mutual fund managers, RIAs, insurance brokers and broker-dealers as well as banks and trust companies. But it's broker-dealers that are clamoring for his help in deciphering DOL's rule.
While Reish's practice has evolved over the years as retirement advice rules have changed, the changes ushered in under DOL's rule— at least for BDs — "are revolutionary and highly disruptive; these rules are truly complex."
Broker-dealers "have the most difficult issues" to deal with under DOL's rule, he continued. "For the most part, RIAs are unaffected; the only area if they are doing it right now is the capturing of rollovers. But for BDs, they're affected on advice to plans, advice to participants and rollovers."
For BDs, the biggest challenge is that DOL's rule is "essentially based on a fee-for-service concept, and they're being applied to a transaction-based industry."
What's more, "the fiduciary standard is different from the suitability standard, and more demanding."
