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DOL Fiduciary News: December 8, 2017

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Nationwide Introduces First Fee-based Fixed Indexed Annuity to Trust Company of America's Liberty Platform 

COLUMBUS, Ohio, Dec. 7, 2017 /PRNewswire/ Nationwide, a leading insurance and financial services organization, and Trust Company of America (TCA), the largest independent provider of integrated technology and custody for registered investment advisors (RIAs), partnered to announce today that the fee-based Nationwide Summit® fixed indexed annuity (FIA) has been added to TCA's Liberty platform.

Pending DOL regulation has shifted the focus of insured retirement products to fee-based designs, but the initial adoption by RIAs has been slow as fee-based advisors struggle to find a solution to householding this portion of the portfolio and charging a fee on the FIA. The addition of Nationwide Summit to TCA's Liberty platform addresses both issues, allowing the FIA to be viewed as part of the overall client portfolio and providing the technology to bill on the entire portfolio.

"With equity markets at or near all-time highs and as more clients near or enter retirement, we are seeing a fundamental shift in advisors moving from traditional asset managers to risk managers," said Nationwide associate vice president of fixed annuity product strategy Mike Morrone. "Summit is perfectly positioned to help protect a larger portion of the client's portfolio and help improve the risk-adjusted returns."

More DC Plan Sponsors Looking to Outsourced Fiduciary Services 

PlanSponsor; December 7, 2017

The Department of Labor (DOL) conflict of interest rule provides a tailwind for the adoption of outsourced fiduciary services in the defined contribution (DC) plan market, according to the latest research from Cerulli Associates.

“Today, it can be difficult to have a DC-related conversation without someone using the terms ‘3(21)’ or ‘3(38),’ which have become DC industry shorthand for nondiscretionary versus discretionary advice,” states Jessica Sclafani, associate director at Cerulli. “Because of the growing awareness of the role and responsibilities of a fiduciary—among plan sponsors and their intermediaries—there is more attention being paid to fiduciary service providers that will act in an ERISA [Employee Retirement Income Security Act] 3(21) or ERISA 3(38) capacity relative to a DC plan’s fund lineup.”

There is a spectrum of fiduciary services offered to DC plans, according to Cerulli. “Baked in” 3(21) and 3(38) fiduciary services embedded in the recordkeeper platform are more common to plans with less than $5 million in assets. “Baked in” refers to when a recordkeeper will engage a provider to conduct further due diligence on the investment options available on a given platform to generate a narrowed list of funds for which the provider will serve as an ERISA 3(21) or ERISA 3(38) co-fiduciary. Providers are typically Envestnet, Mesirow, Morningstar and Wilshire, and products are typically off-the-shelf with a low-touch service model. 

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