Read: Advice vs. education: 4 things plan sponsors must monitor

Notwithstanding the relative safe harbor for RIAs who charge only a level fee, a recommendation to roll over plan assets to an IRA will have to be made in a client’s best interest.

That means fee-only advisors will have to comply with the BIC exemption—they just may not have to actually use the contract.

For RIAs, Reish and Campbell call the contract “BIC Lite”: While level-fee advisors can avoid the contract, they will have to document exactly why the rollover recommendation serves an investor’s best interest, explained the attorneys.

That requirement advantages RIA plan specialists, said Reish. Because they have access to and acquaintance with the intricacies of plan designs, they have greater ability to determine when moving assets out of a plan is in a client’s best interest.

“It is a more practical way to provide for rollovers,” said Reish of the level-fee compensation structure.

While fee-only advisors may be advantaged, it does not mean they will not face stiff competition.

Already, some broker-dealers that have traditionally relied on variable compensation are implementing adjustments.

Reish expects broker-dealers will utilize and grow existing fee-only channels by tapping their most “sophisticated advisors,” and putting them in front of 401(k) plans to offer level-fee advice, and direct “less sophisticated” advisors to only recommend service provider platforms that have incorporated a 3(21) or a 3(38) fiduciary capability.

“In all cases, I think they will be offering only level fees,” said Reish.

This week, two service providers announced they are incorporating fiduciary capabilities into their investment platforms for 401(k) plans.

MassMutual announced a partnership with registered investment advisory Envestnet Retirement Solutions, which will add a new 3(21) fiduciary capability for plan advisors though the Fiduciary Assure program. ERS will provide a universe of investment options that will assure sponsors and advisors meet their fiduciary requirements in offering only prudent investments.

And LPL Financial, the nation’s largest independent broker-dealer by revenue, has rolled out a new 3(38) fiduciary service capability targeted for advisors to the small plan market.

The 3(38) fiduciary designation represents the highest level of advisory care under the Employee Retirement Income Security Act. Under the 3(38) designation, advisors become solely responsible for the selection, monitoring, and replacement of all plan investments.

Reish and Campbell also addressed how DOL’s rule distinguishes education from advice, and how that is likely to affect all advisors’ approach to handling a prospective rollover.

“There is no rule that says you have to make a recommendation,” said Reish, who said he expects advisors will work off a script or format that includes detached language that could define a conversation with an investor in an educational, and not advisory, context.

The attorneys also said advisors may consider providing a disclosure that outlines that a conversation was only for educational purposes when pure advice was not given.

With respect to all advisors, it will be hard to recommend propriety products without using the BIC exemption, the attorneys said.

Even when charging a level fee on an IRA, advisors are most likely going to need the BIC exemption when recommending a rollover into an account that holds a firm’s proprietary investments, they said.

Other potential pitfalls for fee-only advisors could exist when recommending a participant roll assets from an old 401(k) into their current 401(k) employer’s plan, a practice industry and government has been trying to encourage for years.

If the old plan charged less in fees, that action could be prohibited under DOL’s rule, and require the BIC exemption.

Both Reish and Campbell said procrastination was not an option for brokers or advisors in determining the way forward.

The first deadline of the rule’s two-part implementation period is April 10, 2017. To meet that deadline, firms will need to have a compliance strategy in place by as early as this summer.

Some are taking an aggressive approach, the attorneys said, while others appear to be waiting to be told what to do.

“A lot of firms are at different stages of coming to terms with this rule,” said Campbell.

Litigation against the DOL claiming it lacks the jurisdiction to govern IRAs is “very likely,” said Campbell, who was not willing to handicap any potential legal outcomes.

Hoping for a legal ruling against the DOL is not an advisable strategy, said Campbell. “We have to plan as if this rule will survive.”