DOL Fiduciary News: December 22, 2016
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3 significant challenges for annuity advisors in 2017
LifeHealthPro.com; December 21, 2016
By Ben Yahr and Gerry Murtagh, EY
We expect to see significant changes in the annuity industry during 2017. The Department of Labor’s fiduciary rule will become applicable in April 2017 and have major impacts on financial services delivered to the retirement market.
The DOL rule will affect companies’ strategies and operations, the products they offer, the advice they provide and the technology they use to support their customer and distribution networks.
The biggest impact, however, may be felt by advisors. The DOL rule establishes a fiduciary standard for recommending products to retail IRA customers, which means advisors must always act in the best interest of their clients. Distributors are planning to change products and business processes to eliminate conflicts of interest, implement a best interest sales process and efficiently achieve compliance. As a result, advisors will need to adapt to three fundamental changes:
- Downward pressure on compensation
- Fewer products from which to choose
- Longer and more challenging sales processes
To appropriately prepare, advisors will want to examine their business models, paying special attention to the typical needs of their target customers, the products that can meet these needs and the associated compensation.