Los Angeles partner Fred Reish and Washington, D.C., counsel Bradford Campbell were quoted in Investment News in an article titled, “Getting a Second Wind, DOL Likely to Breathe Harder on ERISA Advisers.”

It is expected that the DOL will continue to press enforcement activity tied to its Consultant/Adviser Project, an investigative initiative that scrutinizes the receipt of improper or undisclosed pay such as 12(b)-1 fees by plan consultants and investment advisers.

“We are seeing a real uptick in enforcement against service providers,” said Brad. “It's a way for the DOL to assess how the fee disclosures are doing.”

The DOL is also asking more questions about the plan's relationship with the broker or adviser, with a particular focus on ensuring that compensation for fiduciary advisers is level, regardless of the investment that's recommended.

Some service providers are giving advisers the opportunity to share responsibilities with plan sponsors as a 3(21) co-fiduciary or to take on the duty as a 3(38) investment manager.

Advisers who haven't updated their compensation arrangements still could be receiving variable compensation from fund selections, said Brad.

“If you give advice over which funds to pick, then you need levelized compensation,” he said. Advisers will need to charge plans a flat fee or ensure that the funds' 12(b)-1 fees are all the same.

Fred said that some broker-dealers have tried to manage this requirement by making sure that the compensation of both the firm and the adviser working with the plan are level.

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