Why “Fiduciary” Isn't Going Away Any Time Soon

April 4, the U.S. Labor Department announced it was extending the applicability date for its controversial Fiduciary Rule. The Rule would require advisors to retirement investors to place their clients’ interests ahead of their own, and to charge no more than reasonable compensation for their services. As of this writing, the 60-day extension means the Rule will now take effect on June 9, 2017, instead of April 10. This will allow time for the Labor Department to review whether it would limit access to retirement information and advice

In the meantime, a number of opponents are pursuing lawsuits to kill the Rule completely. While rulings to date have generally favored the Fiduciary Rule, legal maneuvers will no doubt continue. But for many firms, it won’t matter – they’ve either already left the market, or already spent millions preparing for the original April 10 implementation date.

If the Fiduciary Rule dies, what’s next for consumers and the firms that have decided to embrace it? Industry experts say a fiduciary standard for all advisors could still be in the offing, but it may be driven by consumers, not regulators. A new survey by Financial Engines shows that 93 percent of Americans think retirement advisors should be legally required to place their clients’ interests first. The results also found that Americans have gained a better understanding of which advisors are fiduciaries and which are not (21 percent understand the difference this year, as opposed to 18 percent in a survey conducted last year).

So even if the Fiduciary Rule doesn’t take effect, it’s likely there will be growing demand by consumers for advisors who are fiduciaries. As Vanguard Founder and former CEO John Bogle commented in a New York Times Op Ed piece, “The fiduciary rule may fade away, but the fiduciary principle is eternal. The arc of investing is long, but it bends toward fiduciary duty.”

Also, at a recent TD Ameritrade conference, speaker Joe Taiber of Taiber Kosmala & Associates told conference attendees to be prepared. “Regardless of what happens, the cat’s out of the bag now, because clients are more educated,” he added.

If the Rule does go into effect, advisors face yet a different problem. While the Fiduciary Rule, in its current form, discusses conflicts of interest and reasonable compensation, it doesn’t actually define what constitutes a fiduciary level of due diligence. As industry thought leader Michael Kitces points out, the lack of clarity could place firms at risk for lawsuits

Kitces writes that being a fiduciary entails two core duties: a duty of loyalty (to act in the client’s best interests), and a duty of care (to provide diligent and prudent advice in areas in which the advices is competent to provide it). In his opinion, clients could not only sue a financial institution for breaching the fiduciary duty of loyalty, but also for breaching the duty of care – by not training their advisors to be competent.

At Istonish, we believe our Aprisi Assure technology can effectively support advisors and financial institutions in providing fiduciary care. Aprisi Assure provides third-party verification that clients understand the financial products they’re buying, as well as the details of their advisory agreements, which increases trust. It also assists firms with the ability to store and easily retrieve digital evidence of client comprehension in the event of a lawsuit. Finally, Aprisi Assure helps compliance professionals identify gaps in training, by providing data that highlights where and when clients demonstrate a lack of comprehension.

Is your firm prepared to embrace a fiduciary standard of care for clients? If not, Istonish can help.  Sign up for a demonstration of Aprisi Assure, and learn how third-party verification services have helped other regulated industries, such as cable, mitigate risk and comply with regulatory mandates.

Third Party Verification (TPV) for Phone Service

You just signed up for new cable or phone service and suddenly you’re being transferred to a third party verification service (TPV).  Have you ever wondered why? Although TPV is used to verify many other types of transactions, the most common use is to verify your phone service. Following are 7 things you need to know about TPV.

1. Third Party Verifications are required by the FTC (Federal Trade Commission), and the FCC (Federal Communications Commission).

“Slamming” is the illegal practice of switching a consumer's traditional wireline telephone company for local, local toll, or long distance service without permission. Your telephone service cannot legally be switched from your existing authorized telephone company to a new company unless the new company verifies the switch by one of the following methods:

  • Uses an independent third party to verify your oral authorization to switch;
  • Provides and obtains your signature on a letter that indicates, in writing, that you want to switch authorized telephone companies; or
  • Provides a toll-free number that you can call to confirm the order to switch authorized telephone companies.

2. A Third Party Verification is the process of getting an independent party to confirm that a customer is requesting a change.

Before a telephone company can place an order to switch you to a new telephone company that you agreed to use during a telemarketing call, the company must verify your decision to switch by: (1) connecting you to a third party verifier; (2) sending you a letter of agency (LOA) to sign and return; or (3) providing you a toll-free number to call to confirm your decision electronically.

3. Usually conducted via transfer, a TPV provider requests for a customer’s identity to verify an authorized decision.

All third party verifications must elicit from you: (1) the date of the verification; (2) your identity; (3) confirmation that you are authorized to make the change; (4) confirmation that you want to make the change; (5) confirmation that you understand that you are authorizing a company change, not an upgrade to existing service, bill consolidation, or any other potentially misleading description of the transaction; (6) the names of the telephone companies affected by the change (not including the name of the company you are leaving); (7) the telephone numbers to be switched; (8) the types of service involved; and (9) appropriate verification data (such as your date of birth or social security number).

4. In the telecommunications industry, VoIP carriers who connect with the public telephone network are required to notify their customers of any limitation to their E911 systems.

By signing or verbally agreeing to Voice over Internet Protocol (VoIP), customers waive all claims resulting from disruption of 911 service or inability to make emergency calls. 911 service calls may not complete or many be routed to emergency personnel who will not be able to assist you if you disable, damage or move the modem to a location other than the service address your provided your service provider.

5. How to protect yourself against slamming.

Always examine your telephone bill immediately and thoroughly. If you see a new telephone company name on your bill, call the number that’s shown on that portion of the bill and ask for an explanation.

“Freeze” your existing authorized telephone company.

A freeze lets your local telephone company know that you do not want it to switch the telephone companies that you have selected unless it receives written or verbal authorization from you.

6. Over 80% of recently surveyed respondents agreed that a transaction was harder to dispute because the verification was made and held by an independent third party.

Let’s say that one more time: over 80% of respondents agreed that a transaction was harder to dispute because the verification was made and held by an independent third party.

7. Did you know it takes 12 positive experiences to make up for one negative experience?

At Istonish Verification Services, we believe in keeping not only our customer safe, but in keeping your customer happy.  With over 15 million third party verifications, Istonish client portal consists of all of our clients recorded and securely stored TPV calls.

We’ve completed over 15 million verifications and are proud to announce an industry first…Mobile Text Verification.  Now verifications can be delivered directly to your mobile phone.  

Click to learn more about our Third Party Verification Platform, Aprisi Assure!

3 Important Ways That Third Party Verification is Good for Business!

For more than 15 years, using advanced technology consisting of call handling equipment, Integrated Voice Response (IVR) technology, and proprietary software, Istonish has provided third party verification (TPV) services to the cable and telecommunications industry. 

Our relationship with some of the largest companies in the industry was born out of a regulatory mandate (Section 258 of the Telecommunications Act of 1996) in 1996 from the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC) to combat fraudulent

behavior that is known as “slamming and cramming,” whereby operators would illegally switch a consumer’s phone service or add charges for services without a consumer’s permission. The rule requires all providers of wired voice communications lines to obtain reliable proof that a consumer requested a change of service or ordered new service.  Today, Istonish handles more than 4,000,000 transactions annually, supporting verification methods continually updated as technology emerges.

Although it started out as a mandated regulatory requirement, TPV has emerged to play a key role in many areas of business – some of which can apply to any high transaction business like financial services, mortgage financing, retail energy, and others. 

  1. TPV has provided companies with legally admissible evidentiary artifacts for defending against baseless claims of misconduct and lawsuits.
  2. TPV can be used to confirm understanding of critical information that is non-regulated. One such verification that Istonish performs on behalf of our clients is informing cable customers that their cable equipment is associated with a certain physical address, and that the customer must notify the cable company to update records before moving that equipment to a new address, in order for 911 emergency services to serve the correct (current) address. Customers listen to the information and confirm their understanding. These non-regulated third party verifications can be performed as standalone verifications or can be piggy backed with regulated verifications in a single verification activity.
  3. TPV can build customer trust by making sure customers understand the contract into which they are entering and the financial implications, using language that is easily understood.

To learn how our TPV solution can help you, protect your company and your customers, and strengthen relationships with customers, contact us!  Let’s start a conversation.