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DOL Fiduciary News: December 1, 2017

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States may strengthen rules for selling annuities

InvestmentNews; Nov 30, 2017 @ 2:21 pm

State insurance commissioners this weekend will consider a draft proposal to strengthen the rules for selling annuities, an effort to put the marketing of the products more in line with the trend toward heightened investment advice standards.

But a supporter of the Labor Department's fiduciary rule said the insurance regulators' initial attempt falls short of the DOL measure's conflicts-of-interest protections.

A National Association of Insurance Commissioners committee will consider the proposal Dec. 3 at the NAIC meeting in Honolulu. The draft document revises the NAIC's current annuity suitability to make it a best-interests standard for sales of the products, which provide an income stream in retirement but can be complex and costly.

Department of Labor Declares 18-Month ‘Transition Period’ for BICE  

Retirement Income Journal; Thu, Nov 30, 2017

By Wagner Law Group

The DOL finalized its proposed 18-month extension—from January 1, 2018 to July 1, 2019—of the Transition Period for the Best Interest Contract Exemption ("BICE"), Principal Transactions Exemption and PTE 84-24 (collectively, the "Fiduciary Compensation Exemptions" or "Exemptions"). The formal notice of DOL action was published in the Federal Register on November 29, 2017.

The DOL action leaves in place the Fiduciary Rule (which became effective as of June 9, 2017), including the revised definitions of fiduciary and "investment advice" that applies to ERISA plans and IRAs (and similar accounts). The DOL’s action continues the current status for the Exemptions. Financial services firms and others can rely on the BICE and the Principal Transactions Exemption as long as they satisfy the Impartial Conduct Standards.

PTE 84-24 will continue to be available for both fixed and variable annuities as long as the Impartial Conduct Standards are satisfied (along with the conditions in effect before the Fiduciary Rule was proposed). In short, financial advisors, broker-dealers and other financial institutions that are already in compliance with the Impartial Conduct Standards with respect to their ERISA and IRA clients do not need to take additional steps in order to comply with the Exemptions (until the DOL announces new changes). The DOL indicated that it will both complete its review and propose alternative or amended exemptions before July 1, 2019.

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