What process and documentation should be followed for commission-based accounts where monitoring is not required?
Under the DOL fiduciary rule, advisors utilizing commission-based accounts may contractually disclaim an obligation to monitor investments, despite being a fiduciary advisor. The service agreement needs to clearly state that monitoring is not being provided, and recommend that the client seek out periodic advice to ensure the investment remains appropriate. Under the securities law, commission based accounts, unlike fee-based accounts, have no ongoing requirement on the part of the financial advisor to monitor. At the time an investment is made, the advice provided by the financial advisor is subject to a suitability standard of care. The financial advisor should create a document to the effect that the advice given and the decision made was consensual.