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DOL Fiduciary News: August 7, 2017

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Industry groups opposing DOL fiduciary rule maximize spending on author of bill to kill measure 

InvestmentNews; Aug 4, 2017 @ 4:23 pm

Several financial industry trade associations that oppose the Labor Department's fiduciary rule have maximized their campaign spending on the author of legislation that would kill the rule.

In the first half of year, the Financial Services Institute, the Securities Industry and Financial Markets Association, the Investment Company Institute and the National Association of Insurance and Financial Advisors have each contributed $10,000 to Rep. Ann Wagner, R-Mo., whose bill would eliminate the DOL regulation and replace it with a best-interest advice standard for brokers outlined in the measure. The figures are contained in the groups' filings with the Federal Election Commission.

Under campaign finance rules, a political action committee of an interest group can donate $5,000 per election — primary and general — during a campaign cycle. The 2018 campaign cycle runs from Jan. 1, 2017, through Dec. 31, 2018.

A discussion draft of Ms. Wagner's bill was debated by the House Financial Services Committee at a July 13 hearing. Four of the five witnesses at the session were opponents of the DOL rule who were chosen by the panel's majority Republicans. They included industry officials representing FSI, SIFMA and the American Council of Life Insurers, which has contributed $7,500 to Ms. Wagner.

For one compliance chief, uncertainty around fiduciary rule feels like Wild West; August 4, 2017

Andrea McGrew could use some rest.

The chief compliance officer for USA Financial, an Ada, Michigan-based broker-dealer and registered advisory supporting about 150 investment professionals across the country, says she’s had her share of restless nights overseeing the firm’s effort to comply with the Labor Department’s fiduciary rule.

“It’s been a massive overhaul,” McGrew told BenefitsPRO. “The rule has created significant disruptions in for our advisor channel.”

If that sounds like more fiduciary-rule-opposition boilerplate, consider this: McGrew describes herself as a proponent of the rule, albeit a “cautious” one.

“Our stance isn’t that controversial,” says McGrew. “We’re not saying ‘this rule is terrible, get rid of it.’ We are happy to comply with the rule—we just need the Labor Department to let us know what it is.”

Skip Schweiss: The Real Reason the Industry Is Fighting the DOL Fiduciary Rule

ThinkAdvisor; August 4, 2017

Allowing investors to pursue class actions against advisors, broker-dealers and insurance companies under the Labor Department’s controversial fiduciary standard rule is almost certainly the loudest objection voiced by its foes in the industry. Consequently, that critical issue warrants close attention, Skip Schweiss, managing director of advisor advocacy and industry affairs at TD Ameritrade Institutional, tells ThinkAdvisor in an interview.

The firm, strongly in favor of the rule, has been immersed in the fiduciary debate on behalf of independent advisors and investors for more than a decade. Today it remains in the thick of the discussion, talking with legislators and regulators, and meeting with trade associations and other groups.

In studying potential revisions to the rule — at President Donald Trump’s directive — Labor is perhaps focused most heavily on the component that lets investors join class action suits, according to Schweiss. Scrapping it would likely mean dispute resolution by arbitration only.

DOL releases new fiduciary rule FAQs focused on 401(k) plans 

InvestmentNews; Aug 4, 2017 @ 1:30 pm

The Department of Labor has released a new round of answers to frequently asked questions on the fiduciary rule, focusing primarily on issues affecting defined contribution plans and retirement plan advisers.

The FAQs, released Thursday afternoon, are much shorter than previous tranches, addressing only three questions. The headline issue relates to how retirement plan advisers and other plan service providers should treat certain fiduciary disclosures that might have required updates following June 9, when the fiduciary rule partially went into effect. The DOL also provided guidance on recommendations related to increasing plan participation as well as contributions to DC plans and individual retirement accounts.

As of June 9, the regulation made fiduciaries of thousands of advisers who'd previously been delivering investment advice in a non-fiduciary capacity to retirement savers. That, in turn, triggered a conundrum for previously non-fiduciary advisers servicing DC plans, due to an existing section of the Employee Retirement Income Security Act of 1974 called 408(b)(2). That provision requires service providers receiving compensation from a DC plan to disclose their fiduciary status to clients. These newly minted fiduciary advisers would have had to update their disclosures to represent this new status.

The new round of FAQs addresses this confusion. The DOL said service providers, including advisers, don't need to use the term "fiduciary" to satisfy their updated disclosure requirements, as long as they accurately disclose the services being provided to the client. 

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