The data needed at each stage in the customer lifecycle
has increased significantly. While many attributes related to a client profile are already captured, they are often
stored in paper files in remote locations and manually
maintained and/or re-keyed into various applications.
Under the DoL rule, firms will need the ability to access and update this informa-
tion in real time, leaving some firms to look to their customer relationship management
(CRM) system as a possible data collection and maintenance solution. Further, as a firm
fulfills its fiduciary duty, it will need the ability to connect client conversations, particu-
larly those covering investment recommendations, to its CRM system, product master
and account master. In addition to the client-level information, firms will need the fol-
lowing data to support their best interest sales process:
• Product data such as features, performance and fees
• Peer group analysis on compensation
• Industry data aggregators for plan costs, advisory program fees and brokerage plat-
• Academic research to discover new advice strategies
• Supervisory findings
firms believe they
already act in the
are not currently
serving as ERISA
fiduciaries in the
Enhance supervisory process to identify new risks
Monitoring compliance with the DoL rule is a top priority for financial institutions. The
largest firms are trying to make compliance as efficient as possible at the enterprise level.
Firms adopting a more prescriptive advice approach and a focused product menu will be
able to rely on their existing framework with modest enhancement. Firms that are allowing
more advisor freedom will need to consider adopting new technology and analytical tools to monitor advisor performance and to
identify outlying behaviors and supervisory red flags.
Firms will focus on a range of indicators, including:
• Sales history by product type, fund families and other factors
• Assets under management by product type
• Sales practices, including outlying behaviors such as churning
• Compliance with firm policy such as form completion, customer signatures or branch manager approval
Firms will use analysis to determine the need for case reviews and audits vs. further product education or process training.
Advisors should recognize that monitoring is likely to increase, and additional training may be mandatory.
The bottom line: Thoughtfully designing a
prudent process will create opportunity
The DoL rule’s best interest standard is principle-based, and
therefore open to interpretation. Designing a robust process
so that advisors act prudently is challenging, and firms will
design approaches to suit their distribution networks, product
portfolios and client bases.
Determining the right balance of prescription and flexibility
is critical to demonstrating compliance and seizing the associ-
ated business opportunities. Firms that take a strategic ap-
proach to designing a prudent process will create more value
for their customers and be in a better position to compete in
Ben Yahr, Jill Peckingham and Justin Singer are senior managers
and Eric Wolfe is manager in EY’s financial services office.