The Department of Labor’s (“DOL’s”) Conflicts of Interest rule (“the DOL Rule”), and its broad applications, will inevitably impact a wide range of retirement investors and most financial services firms that deal directly with investors. As the DOL Rule will materially go into effect April 10, 2017, it is important for financial firms to determine how they might comply with these rules and which exemption may be relied upon to continue performing advisory services on behalf of retirement investors. In the Regulatory Impact Analysis section of the Best Interest Contract Exemption (“BICE”) final rule release, the DOL stated an expectation that 13,000 of 20,000 (65%) financial institutions would qualify as, and rely upon the level fee fiduciary (“LFF”) exemption. The DOL views level fee compensation arrangements as inherently less conflicted than variable compensation arrangements and provided an abbreviated path to compliance using a streamlined Best Interest Contract Exemption (“BICE”) which has been dubbed the “BIC-lite.” There are two keys to qualifying for the BIC-lite: a level fee compensation arrangement and meeting the best interest standard for recommendations. This article will examine some of the considerations when qualifying for the BIC-lite.
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