DOL Fiduciary News: January 9, 2017
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Congressman introducing bill delaying DOL fiduciary rule
InvestmentNews; January 6, 2017, 12:34 pm
Rep. Joe Wilson, R-S.C., introduced a bill Friday that would delay the implementation date of the Department of Labor's fiduciary rule by two years from enactment of the legislation.
"This legislation will delay the implementation of this job-destroying rule, giving Congress and President-elect Donald Trump adequate time to re-evaluate this harmful regulation," Mr. Wilson, a member of the House Committee on Education and the Workforce, said of the Protecting American Families' Retirement Advice Act.
House SEC oversight job goes to Congressman opposing fiduciary rule
Financial Advisor; January 6, 2017
Michigan Congressman Bill Huizenga has been chosen the new chief Securities and Exchange Commission overseer in the House as chair of the Financial Services Committee’s Capital Market’s Subcommittee.
The selection was first reported in Politico. Starting his fourth term, Huizenga has opposed the Labor Department’s fiduciary rule and proposed Social Security privatization for younger workers.
Finra Targets VA Sales, Again
Financial Advisor; January 6, 2017
In the first week of the new year, the Financial Industry Regulatory Authority issued its annual statement of priorities for the foreseeable future. Among the problems it's focusing its sights on: "excessive and short-term trading of long-term products," including variable annuities (VAs).
"Finra has had a target on the backs of VA peddlers for a really long time, but this is a shot across the bow – a sort of reminder to VA firms that Finra is watching you," says Andrew Stoltmann, a Chicago-based attorney who says he's been involved in some 150 VA-related legal disputes over the past 15 years. He knows the territory.
The problem, essentially, is that VAs are designed to be long-term investment vehicles. But some brokers are inappropriately convincing clients to trade them on a relatively short-term basis, so the brokers can pocket back-end fees. Needless to say, this premature trading is not generally in the client's best interests.
Next SEC chair won't need a new rule to enforce fiduciary standard
BenefitsPro.com; January 6, 2017
This week’s nomination of Wall Street attorney Jay Clayton to head the Securities and Exchange Commission prompted speculation that the agency charged with policing financial markets will pivot from a rulemaking and enforcement posture to one focused on facilitating more access to capital markets.
If accurate, the fate of the long-awaited SEC version of a rule creating a uniform fiduciary standard for the investment advisory industry may be in jeopardy.
Last Spring, outgoing SEC Chair Mary Jo White said a proposal for the Personalized Investment Advice Standard of Conduct rule would be released in April of 2017, about the time the Labor Department’s fiduciary rule is scheduled for implementation.
Brokers Once Disdained Independent Advisers. Now They Copy Them
The Wall Street Journal; Jan. 6, 2017 7:45 a.m. ET
Executives at Wall Street’s biggest brokerages for years have dismissed independent financial advisers as unsophisticated rivals who worked out of strip malls.
These registered investment advisers acted as fiduciaries required to put clients’ best interests ahead of their own, collected fees instead of commissions and didn’t receive compensation to promote one product over another.
Brokers, meanwhile, were traditionally tasked with pushing stocks and bonds on investors for a commission and held to the looser standard of having only to ensure recommendations were suitable.}
Record keepers gear up for advice role
Pensions & Investments: January 9, 2017
Several large record keepers are expanding their fiduciary duties by providing more advice to defined contribution clients in response to the Department of Labor's conflict-of-interest rule that is slated to take effect in April.
They are willing to take on more responsibilities in areas such as investment product selection, IRA rollovers and even financial wellness. In many instances, what was considered education before the regulation will be considered advice and a fiduciary event by the Labor Department.
“We took a long hard look at this,” said Margaret McKenna, executive vice president of relationship management for Fidelity Investments, Boston. “Guidance is now advice. It's a big, bold change for our industry.”
Brace for thousands of new DOL fiduciary-friendly mutual fund share classes
InvestmentNews; January 6, 2017, 1:10 pm
Expect a barrage of new, DOL fiduciary-friendly T share classes from the mutual fund industry this year, according to Morningstar.
The Chicago-based investment tracker says that as many as 3,800 new share classes — about as many as there are A shares — could make their debut in response to the new Department of Labor fiduciary rule.
The T shares would feature a uniform 2.5% front-end load and a 0.25% trailing 12-b(1) fee. The front-end load would decline for larger purchases, and no dealer reallowances would be allowed, according to Morningstar columnist John Rekenthaler.