Skip to content

DOL Fiduciary News: December 12, 2017

Please Note:

These links will take you directly to the homepage of the website that features the article.

To reach the article directly, copy and paste the article title into the search feature on the homepage of the publication website.

Industry opponents urge appeals court to rule on DOL fiduciary rule

InvestmentNews; Dec 11, 2017 @ 11:44 am

Financial industry opponents of the Labor Department's fiduciary rule are urging an appeals court to rule on their case, despite the fact that major parts of the regulation won't be implemented until 2019.

In a Dec. 8 letter to the U.S. Court of Appeals for the Fifth Circuit, the plaintiffs in a lawsuit against the rule said the delay of the regulation should not hold up their appeal, because parts of the rule have already been implemented.

"In light of ongoing compliance burdens, appellants submit this response to clarify that the delay rule does not diminish the urgency of this appeal," wrote David W. Ogden of the law firm Wilmer Hale on behalf of the American Council of Life Insurers and other plaintiffs.

In addition to ACLI, the plaintiffs include the Securities Industry and Financial Markets Association, the Financial Services Institute, the Financial Services Roundtable and the U.S. Chamber of Commerce.

Finra report hints at trouble with L-share variable annuities

InvestmentNews; Dec 8, 2017 @ 1:18 pm

Variable annuities sold in an L share continue to turn up as products plaguing broker-dealers and their compliance departments.

Finra, in a recent report detailing its examination findings, called out "multi-share class and complex products" as a primary area of failure for brokerage firms, which struggle to ensure that products their representatives sell are suitable for investors.

The broker-dealer watchdog cited an example involving "short-term surrender variable annuity transactions." More than 50% of the customers involved in these transactions had a long-term investment horizon, despite the short-term nature of the annuities.

While Finra doesn't explicitly name L shares here, the description is an exact match. Investors pay more for the liquidity of L-share variable annuities, which often have three-to-four-year surrender periods. They carry fees roughly 0.35% to 0.50% higher than B shares, the most popular type of VA, which carry longer surrender periods, typically seven years.

However, regulators have questioned why investors would pay higher fees for an L-share annuity that carries a guaranteed-income feature, an inherently long-term rather than short-term play because it offers a lifelong income stream. In these cases, investors don't need more liquidity. 

Did you accomplish the goal of your visit to our site?

Yes No