The Lawsuitability Standard

By Kyle VanPelt, Managing Director of Partnerships at Riskalyze

It’s been interesting to scan through all the op-ed pieces about the DOL ruling now that it’s officially here to stay. There’s no shortage of opinion on what it actually means for the financial services industry.

One thing’s for sure, we all know whose best interests are at stake…


There is still plenty of ambiguity on how the rule will actually be enforced. With ambiguity comes wiggle room for predatory advisors to continue taking advantage of their clients. The biggest difference now is that they won’t have a leg to stand on when they’re sitting in court. That sounds like a fantastic recipe for lawyers to have a field day!

If that is true, then lawyers will naturally go where they can get the most bang for their buck. That means class-action lawsuits.

Where better to look for class-action lawsuit potential than huge corporations with thousands of 401K participants? In fact, we’re already seeing the sparks fly in this arena. (See: Delta employees sue for 'illegal kickbacks' and Plan sponsor sued for excessive fees in $25 million 401(k)).

From the moment we laid eyes on the first draft of the rule here at Riskalyze, we’ve said the same thing: no longer can advisors simply act in a client’s best interest, now they must be able to prove it.

The powerful thing is: Riskalyze advisors have been proving this for years by putting the Risk Number® at the heart of their client engagement model. And our recent launch of Autopilot for Retirement Plans was no mistake: this is a powerful way for advisors to drive that proof into the heart of how they serve 401Ks, 403Bs, 457s and Simple IRAs.

Autopilot for Retirement Plans empowers advisors to go on offense by onboarding participants and getting them invested correctly, while simultaneously shoring up their defense in preparation for the fiduciary rule.

Participants take a simple best interest exercise, confirm their Risk Number, and see the elections that work for them. Advisors then have a well-documented paper trail demonstrating they’re working in their clients’ best interests.

Legal experts call that kind of paper trail “hardening the target” — ensuring that there is other “lower hanging fruit” for trial attorneys to chase. When an attorney looks at a retirement plan and sees the Risk Number at its heart, the bar just got a lot higher for a lawsuit to get filed.

And everyone wins in that situation…except the lawyers.

Additional DOL Resources:

DOL Bootcamp by Beacon Strategies
Advisor’s Guide To DOL Fiduciary by Michael Kitces
DOL Fact Sheet by The Department of Labor
DOL Solutions by Riskalyze
DOL White Paper by Riskalyze and Beacon Strategies