New York
21 April 2017
Reporter: Stephanie Palmer

DTCC pushes ahead with best-interest standards despite regulatory delay


The Depository Trust & Clearing Corporation (DTCC) Wealth Management Services (WMS) business will go ahead with new capabilities to meet the US Department of Labor’s mandatory best-interest standards for retirement savings, despite the department delaying implementation of the standards.

The WMS business has developed new features and service improvements intended to help with disclosure and sharing of commission schedules, fees and expense data, as required under the new standards, which were scheduled to come into effect on 10 April.

Following the change in the US administration in January, the Department of Labor (DOL) opted to delay the rule for at least 60 days. According to DTCC, it is also possible that the requirements could be loosened.

However, DTCC has maintained it will still implement the changes to its services, saying there is a demand in the market for new ways to provide transparency to investors, whether this is mandated or not.

Ann Bergin, managing director of DTCC and head of WMS, said: “We made a commitment to ensure our clients would be prepared to meet fiduciary-related requirements in time for the target compliance date.”

She added: “Our clients want to expand disclosures and transparency now, and we’ve delivered those capabilities.”

The DOL’s mandatory best-interest standards were intended to reduce conflicts of interest in the retirement advisory business, and to discourage the use of high-cost, commission-based investment products.

In their current form, the standards require any advisor providing covered investment advice to maintain a particular fiduciary standard, making investment recommendations that are in the clients’ best interests.

They also require providers to disclose all fees, conflicts of interest and compensation from third-parties related to recommendations.

Advisors offering commission-based products must also adhere to additional disclosures around best-interest contract exemption.

Changes to the WMS capabilities include new features and service improvements to help with disclosure of the required data, helping clients of insurance and retirement services, mutual fund services, and alternative investment product services to comply with the standards when they are implemented.

According to DTCC, the new services also address investor demand for more information about fees and expenses incurred on their investments.

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