A Manual Compliance Process is Not Enough: Fiduciary Rule 3.0 and PTE 2020-02

The window for firms to meet compliance for PTE 2020-02 is getting shorter. In October 2021, the DOL stated that all proper processes need to be in place by January 31, 2022 and documentation and disclosure by June 30, 2022.

InvestorCOM hosted a roundtable event “Preparing for PTE 2020-02” which facilitated a collaborative discussion with compliance leaders from twelve firms about strategies for meeting the PTE 2020-02 requirements and predictions surrounding future requirements.

One important insight captured from the event centers on what to do if your firm is not compliant by the regulatory deadline. Answer? Be prepared to show your work.

The DOL seems to recognize the scale of the compliance and implementation challenges facing firms for meeting the regulatory obligations and deadlines posed by Fiduciary Rule 3.0. Some firms may not have started their programs, while others may have a great deal of complexity to work through in implementing new policies, processes, improving data quality and putting new technology stacks in place.

While it may be tempting for firms to simply implement a manual program for compliance, this would be a mistake. For most firms, a manual compliance process for Fiduciary Rule 3.0 – and for future regulation – is simply not sustainable. Manual processes also open the firm up to potential operational risks and compliance breaches. Hence, implementing a strong technology-based solution will position the firm for compliance success.

The DOL may recognize a firm’s roadmap that shows the goals that the organization has achieved towards compliance, and the progress towards completing the tasks ahead. If a firm knows that it will not be compliant by the deadline, it should draft a detailed roadmap, and ensure that key internal stakeholders such as the board and senior management are familiar with it as well.


Read more insights captured from the roundtable event, “Preparing for PTE 2020-02”.



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