Mutual Fund / 529 Plan Disclosure Form --- Effective Date 9-12-16
Nearly all IPI advisors utilize mutual funds with their clients due to the advantages of built-in diversification, professional management, ease of buying/selling and the variety of funds to choose from in the market. But before investing in a security, clients must understand the risks of the investment, the costs involved, how costs and expenses are charged and how you/the firm is compensated. Regulators are increasingly requiring advisors and firms to show written proof of disclosing the risks and rewards of investing in securities to clients, disclose/resolve conflicts of interest and provide information on all fees involved with the transaction. IPI is taking the steps necessary to stay ahead of these issues with regulators and to get you and your clients ready for DOL next year.
Therefore, in preparation for these upcoming changes, as of 9/12/16 we will require a Mutual Fund / 529 Plan Disclosure form (attached here) on (1) new brokerage (RBC) accounts that will purchase mutual funds and (1) new direct mutual fund accounts and (3) new 529 Plan accounts. I recommend that if you are opening a new RBC account and think that a client may in the future purchase a mutual fund that the form should be completed and enclosed with the new account form. It may also be a good idea to go over the form at your next client meeting and have the clients execute a copy as well; please then forward a copy to Operations and/or upload it to B/D Review in Docupace. For current RBC accounts, we will be working with RBC to see if we can include the mutual fund only portion as an insert in the client's September statement (big shout out to Julie Cox as this was her idea!).
The Mutual Fund / 529 Plan Disclosure is fillable and allows one form to be used for all accounts of a client through listing the various account numbers (RBC and direct) on the form. It provides an overview of investment risks, share class costs, info on purchasing in multiple fund families, investment time horizon, risk factors and potential 529 plan tax benefits. It provides links to the FINRA Fund Analyzer for mutual funds and the FINRA 529 calculator for clients to compare funds and 529 plans. Please remember to utilize this form with any 529 Plan purchase effective on and after 9/12/16. If you want to start using the form now for mutual funds and 529 plans, please feel free to implement it prior to 9/12/16.