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DOL Fiduciary News: August 23, 2017

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SCEBS Addresses Common BICE Questions

PLANSPONSOR.COM | August 22, 2017

As the Department of Labor's (DOL) fiduciary rule goes through its phased implementation, some financial institutions and advisers will take on new requirements regarding the delivery of investment advice to retirement plan participants and other stakeholders. Some may choose to stop offering investment advice all together.

Built into the rule, however, is the Best-Interest Contract Exemption (BICE). This part of the expanding fiduciary regulations aims to protect plan participants from receiving costly or conflicting investment advice, while allowing service providers and advisers to keep offering retirement plan investment advice under existing compensation structures, as long as they meet certain fairness standards under the Employee Retirement Income Security Act (ERISA). BICE rules are very important for plan sponsors and advisers to consider when interacting with various vendors.

To give plan officials a closer look into what these rules can mean for them and to help advisers understand what will be required of them, the International Society of Certified Employee Benefit Specialists has released a new report, “Everything You Wanted to Know About BICE But Were Afraid to Ask.”

Thrivent Fights DOL Fiduciary Rule’s Anti-Arb Clause

ThinkAdvisor; August 22, 2017

Thrivent Financial for Lutherans, the insurer suing the Department of Labor over its fiduciary rule, said Monday that it plans to file a preliminary injunction soon to halt the anti-arbitration clause set out in the rule’s best-interest contract exemption.

In a Monday letter to Judge Susan Richard Nelson in the U.S. District Court for the District of Minnesota, the lead attorney for Thrivent, Andrew Kay, said that due to Labor’s refusal to address Thrivent’s concerns about “the anti-arbitration condition that remains part of the [best-interest contract exemption]” to the fiduciary rule, Thrivent intends to “file soon” a motion for preliminary injunction.

Thrivent became the sixth plaintiff to lob a complaint against Labor’s fiduciary rule when the insurer filed a suit last September challenging the class-action waiver requirement under the rule’s best-interest contract exemption, or BICE.

Fiduciary advocates press CFP Board for specifics on standards changes

InvestmentNews; Aug 21, 2017 @ 2:05 pm

Fiduciary advocates are urging the Certified Financial Planner Board of Standards Inc. to clarify how credential holders must avoid or manage conflicts of interest under a proposed reform of the mark's rules.

Earlier this summer, the CFP Board released a draft update of its code of ethics and standards of conduct ( that would require all CFPs, including brokers who use the mark, to act in the best interests of their clients at all times when they are providing investment advice. The current standard holds CFPs to a fiduciary standard only during the financial planning process.

The revised rules would require a CFP to "seek to avoid conflicts of interest, or fully disclose material conflicts of interest to the client, obtain the client's informed consent and properly manage the conflict."

Benefits and Challenges in Centralized Investment Decisions

PLANADVISER | August 22, 2017

Given the pending Department of Labor (DOL) fiduciary rule and increasing litigation risk, there is a growing trend among retirement plan advisory practices to centralize oversight of investment lineup decisions at the home offer, rather than to leave them to the discretion of the adviser.

“This is a very interesting time of disruption in the marketplace,” observes Shelby George, senior vice president of adviser services at Manning & Napier in Rochester, New York. “The question of whether advisers should outsource management of investments is the biggest issue that they are struggling with today. There is not necessarily a right or wrong answer.”

Steve Bogner, managing director of Hightower Treasury Partners in New York, also believes this is a growing development in the retirement planning industry: “There’s a growing trend among certain retirement advisory firms to assume greater control over how investment decisions are being made,” he says. “Companies that are taking greater control in this area are likely attempting to limit their exposure to potential liability issues [as well as] the future implementation of the DOL’s new rule.”

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