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DOL Fiduciary News: April 17, 2017

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AmeriLife Faces DOL Rule with Two-Track Strategy

ThinkAdvisor; April 14, 2017

The Trump administration has ordered a 60-day review of the U.S. Department of Labor’s conflict-of-interest rule, but insurance intermediaries continue to prepare to comply with the DOL rule.

Many of the independent marketing organizations that distribute indexed annuities are hoping to meet the supervision requirements created by the rule by securing financial institution status under the rule, or by teaming up with other IMOs that are financial institutions.

Other IMOs are pursuing a two-track strategy: They are applying to become DOL-compliant “financial institution marketing organizations,” or “FIMOs,” and they are also setting up registered investment advisors.

Fiduciary Rule Comments Due by Monday Night

InsuranceNewsNet; April 14, 2017

All public comments on the controversial Department of Labor fiduciary rule must be filed by 11:59 p.m. Monday. The deadline is the second of two put forth by the DOL. The first deadline passed March 17, and was to accept comments on a 60-day delay that was published April 7. Monday’s deadline is on the substance of the rule and the directive set forth by President Donald J. Trump.

The agency is accepting comments through the rule posting on the Federal Register.

The DOL regularly posts comments and petitions as it receives and processes them. It posted 1,166 comments and 24 petitions on the 60-day delay.

Delay seen as making DOL fiduciary rule more likely

Pensions & Investments; April 17, 2017

Despite a concerted effort to kill the fiduciary rule, the Department of Labor's recent decision to grant a 60-day delay in the rule's implementation is giving plan sponsors more certainty that the rule will stick —and putting more pressure on service providers to be ready by June.

The DOL decision to push back the rule's April 10 start date instead of holding up the rule indefinitely to address a White House call for wholesale review also has dimmed prospects for major changes in the future.

For plan sponsors, the two-month delay “is probably encouraging. It looks like it's going to be a robust standard,” said Patrick DiCarlo, a benefits lawyer with the Alston & Bird LLP law firm in Washington.

Morningstar Pushes Change in DOL Fiduciary Rule Enforcement

ThinkAdvisor; April 13, 2017

In its first comment letter to the Labor Department on the substance of the agency’s fiduciary rule, Morningstar explains its support for the rule but offers an alternative to the Best Interest Contract Exemption (BICE) and enforcement by way of class action lawsuits. The letter responds to the latest request from the Department for public comment on the rule, whose implementation has been delayed for 60 days, until June 9.

The agency is seeking comment on issues raised by a presidential memorandum including whether the rule will reduce access to certain retirement savings offerings and advice, disrupt the retirement services industry in ways that could hurt investors and retirees, or increase litigation and the prices investors and retirees pay for retirement services. The comment period ends Monday, April 17.

More Managers Introduce ‘Clean’ and ‘Transactional’ Shares

PLANADVISER.COM | April 14, 2017

According to a new Morningstar report, the Obama-era Department of Labor (DOL) conflict of interest reforms, while facing an uncertain future, have already promoted real change among advice and investment product providers working under the Employee Retirement Income Security Act (ERISA).

In particular, Morningstar has measured a strong increase in the offering of two relatively new mutual fund share classes, known as “transactional” shares and “clean” shares. As the firm explains, the first share class, commonly referred to as “T shares,” aims to help financial advisers maintain their traditional business model—selling mutual funds on commission—while complying with the letter and spirit of the new conflict of interest rules.

They key development around T shares is that they feature uniform commissions, Morningstar explains, “thereby reducing or eliminating financial advisers’ conflicts of interest in making recommendations to clients.”

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