The new rule change proposed by the Department of Labor (DOL) is designed to require the same level of financial advisor responsibilities for Individual Retirement Account (IRA) rollovers, as is currently mandated for FRS Investment Plan accounts. The higher standard referred to by the DOL rule change is known as the fiduciary standard. A financial advisor who provides investment advice in compliance with the new fiduciary standard is required to act in their client’s best interests, including the avoidance of any conflicts of interest and to provide full disclosure of any business relationships which represent potential conflicts of interest.
The DOL’s new proposed rule will create a financial advisor’s fiduciary duty for transactions that include, any recommendation to take a distribution from the FRS Investment Plan as an IRA rollover, or keep the retirement account balance with the FRS Investment Plan. True North Financial Advisors offers investment advisory services for Florida Retirement System participants, for FRS Investment Plan accounts and IRA rollovers that are consistent with the proposed DOL rule changes, as a fiduciary. The investment advisory services include third-party money managers that accept full fiduciary responsibility for the development of investment strategies based on client investment objectives, investment time horizon and risk tolerances, which are implemented and monitored through the use of personalized:
Investment Policy Statement; and
Asset Allocation Models.
Additionally, True North Financial Advisors offer fee-based financial advice to FRS Investment Plan participants with valuable financial planning guidance concerning their retirement plans in three areas:
Determine contributions to meet their retirement income goals;
Recommend suitable investment allocations investment options, over time;
Taxation of withdrawals from pension plan, including premature 72(t) withdrawals.
True North Financial Advisors provides investment advisory services to FRS Investment Plan participants that comply with the proposed DOL proposed rule changes. The FRS Investment Plan Self-Directed Brokerage Account (SDBA) option has provided pension plan participants with access to greater investment choices, including fee based investment advisory services. Employee Retirement Income Security Act of 1974 (ERISA) section 3(21), provides that when an individual pension plan participant hires an investment advisor, they are fiduciaries under ERISA section 3(21).
According to ERISA section 3(21), a fiduciary is an advisor who provides investment advice for a fee with respect to any investments of a pension plan. A fiduciary duty is owed to each pension plan participant by the investment advisor under the ERISA rules; if they exercise any authority or control over the management of the pension plan assets in return for a management fee. As a fiduciary, investment advisors are responsible to:
Understand pension laws and plan provisions;
Diversify assets based on specific risk/return profile of client;
Prepare investment policy statement;
Select money managers and document due diligence;
Control and account for investment expenses;
Monitor the activities of money managers; and
Avoid conflicts of interest and prohibited transactions.
True North Financial Advisors offer investment advisory services to FRS Investment Plan participants and represents third-party investment managers who act as ERISA 3(21) fiduciaries when managing FRS Investment Plan accounts through self-directed brokerage accounts held in the FRS Investment Plan. The fee-based investment advisory services include the establishment of a personalized investment policy statement that is based on the risk tolerance and investment time horizon of the pension plan participant. The investment advisory services are available through the FRS SDBA for plan participants with pension assets held in FRS Investment Plan and 457 deferred compensation plans.
True North Financial Advisors is dedicated to a truly unique relationship of trust and confidence with those individuals we help. We trust your access to our professional experience and knowledge of the financial services industry will provide the direction you need to find your True North.
