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DOL Rule Sets Up Compensation Minefield
InsuranceNewsNet; July 28, 2016
The Department of Labor fiduciary rule was published nearly four months ago, but analysts say broker-dealers and their advisors still don’t fully understand how compensation is affected.
The rule requires anyone working with retirement funds to act in the best interest of their clients. That means “conflicted” compensation, like trail commissions and trips to Cancun, are out.
However, the DOL included a series of exemptions permitting advisors to continue accepting such compensation if they meet certain disclosures and the recommended investment product is still in the best interest of the client. Specifically, the Best Interest Contract exemption theoretically allows advisors to continue selling variable and fixed-indexed annuities on a commission basis.
Ameriprise spends $11 million-plus this year on DOL fiduciary rule
InvestmentNews, July 29, 2016 @10:30 am
The expense speaks to the difficulty some broker-dealers may have with DOL rule compliance.
In a show of just how expensive the Labor Department's fiduciary rule could prove for broker-dealers, Ameriprise Financial Inc. executives said the firm has shelled out more than $11 million in the first half of the year in the name of compliance with the regulation.
Ameriprise, which has a national network of approximately 10,000 advisers, incurred a $7 million expense related to “DOL planning and implementation” in the second quarter, according to a release announcing the company's quarterly earnings results.
PLANSPONSOR.COM | July 29, 2016
The Department of Labor’s (DOL’s) final fiduciary (or conflict-of-interest) rule exempted health and welfare plans from its final rule requirements except where they have an investment component, so if a health savings account (HSA) has an investment component, anyone giving advice about those investments will need to enter into a best interest contract (BIC) with the plan sponsor or participant.
In an article about what the fiduciary rule means for HSAs, Kevin Robertson, senior vice president, director of sales at HSA Bank, notes that much of the guidance focuses on the definition of “investment advice,” but the rule also provides guidance about what constitutes a “recommendation.” Plan sponsors and advisers need to make sure education does not cross over to where a participant might view anything as a suggestion or advice.