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DOL Fiduciary News: June 21, 2017

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Lincoln Cuts Some Annuity Comp from Agent Plan Totals

ThinkAdvisor; June 20, 2017

The controversy over retirement savings product sales standards may affect agents' and advisors' ability to save for their own retirement.

At least one insurer, Lincoln Financial, has excluded agent compensation related to some retirement savings products from agents' own retirement benefits calculations.

...Lincoln Financial's retirement plan move affects at least two plans: the LNL Agents' 401(k) Savings Plan and the Lincoln National Corp. Deferred Compensation Plan for Agents and Brokers, according to two prospectus change documents filed Monday with the U.S. Securities and Exchange Commission.

The company did not say in the filings why it made the retirement plan changes, but the changes appear to affect only the kinds of retirement saving products affected by the U.S. Department of Labor's fiduciary rule. The DOL fiduciary rule took effect June 9. The agent and broker retirement plan changes apply only to earnings related to annuity and retirement products transactions taking place after June 9.

Rise in Shorter-Term Surrender FIAs Means Commission Declines

InsuranceNewsNet; June 21, 2017

The emerging popularity of fixed indexed annuities (FIA) with a seven-year surrender period is reducing commission income to agents, data shows.

First-quarter indexed annuity commission received by agents dropped to 4.96 percent from 5.37 percent in the year-ago period, data from Wink’s Sales & Market Report indicate.

“Shorter-term products pay lower commissions,” said Sheryl J. Moore, president and CEO of Moore Market Intelligence and Wink, publisher of the life and annuity industry data tracker Wink’s Sales & Market Report.

CFPs, including brokers, may have to adhere to a stricter fiduciary duty

InvestmentNews; June 20, 2017 @ 8:00 am

Certified financial planners, including those working at broker-dealers, would have to adhere to a fiduciary standard at all times under new rules proposed by the organization that grants the designation.

Under a new 17-page code of ethics and standards of conduct released by the Certified Financial Planner Board of Standards Inc. on Tuesday morning, the definition of fiduciary would be broadened.

By doing so, the CFP Board is trying to close loopholes that exist with its current definition, which requires fiduciary duty from mark holders only during the financial planning process. Critics have said that the parameters allow CFP holders to switch hats, adhering to fiduciary duty during planning but ignoring it while selling financial products.

The change is expected to have a greater impact on advisers working at broker-dealers than at registered investment advisers since RIAs already adhere to a fiduciary standard that requires them to act in the best interest of clients. Broker-dealers follow a less onerous standard that requires their advisers to sell investment products that are "suitable" for a particular client.

Mutual fund alphabet to lose letters in the fiduciary future

Financial Planning; June 20 2017, 4:04pm EDT

SAN DIEGO – Advisers face a future marked by a smaller menu of choices among mutual fund share classes, according to a half dozen experts.

The Department of Labor’s fiduciary rule, SEC enforcement and long-term trends toward lower expense ratios are cutting down on the alphabet soup of offerings, said panelists at last week’s Pershing Insite conference. Such factors pose a huge impact on Class C and Class T shares in particular.

SEC officials vowed to lead change last year in announcing a greater focus on whether advisers’ share-class selections cost their clients 12b-1 fees they could have avoided. The regulator broke its enforcement record for the year, and the rule has spawned hundreds of low-fee T shares.

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