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Cutting through the red tape of adviser regulation is tricky
InvestmentNews; Jan 20, 2018 @ 6:00 am
Although the Trump administration has made a rollback of regulations a top priority, the pace of rulemaking and oversight is set to pick up this year for financial advisers.
"Folks have a misconception about how things get done in Washington," said Karen Barr, president and chief executive of the Investment Adviser Association. "A new administration comes in and people think, 'Deregulatory, so now we don't have to worry. These rules are going to be rolled back.' That is just not the case."
So what can advisers expect?
The Securities and Exchange Commission has streamlined its near-term regulatory agenda, but two of the items have a direct impact on advisers. By October, the agency intends to propose a rule setting the standard for personalized investment advice and another that would ease the approval of new exchange-traded funds.
And SEC Chairman Jay Clayton has made retail investor fraud one of his enforcement priorities. The agency recently established a special unit whose agenda includes searching for hidden advisory fees. "2018 is a year of action for the SEC," said Adrian Whelan, head of regulatory intelligence at Brown Brothers Harriman.
Fiduciary Reforms Impact Plan Leakage Trends, Income Decisions
PLANADVISER; January 19, 2018
Callan has published its 2018 DC Survey, offering up a highly detailed overview of the U.S. defined contribution (DC) plan industry.
The extensive analysis covers a broad range of topics, including the “leakage challenge” faced broadly by plan sponsors large and small.
According to Callan’s research, most plan sponsors (79.6%) have taken steps in the recent past to prevent plan leakage, but they have met only moderate success. Some of the more common strategies observed by Callan researchers included offering partial distributions and encouraging rollovers in from other qualified plans, which tied for the most common strategies cited by plan sponsors, both at 56%.
“More than half offer installment withdrawals (50.5%),” Callan reports. “Nearly two-thirds (62.4%) anticipate taking additional steps to prevent plan leakage in 2018—most notably, more actively seeking to retain terminated/retiree assets.”
As others have reported, Callan suggests the ongoing Department of Labor (DOL) fiduciary rule reform effort—even with all its tribulation and uncertainty—is helping to shape the increased reports of plan design and investment changes. For the most part, Callan says, plan sponsors are being very conscious and cautious with respect to decisions made to manage the implications of the rule.
State fiduciary rules may be reckoning for life insurance industry
InvestmentNews; Jan 19, 2018 @ 3:31 pm
The life insurance industry escaped the jaws of the Department of Labor fiduciary rule only to come face to face with another beast: the states.
New York's recent proposal to impose a best-interest standard on life-insurance sales — a higher standard than currently exists — would have a significant impact on insurance agents and brokers, by upending the way they currently conduct business.
While New York is the first state to propose such a standard, other states, especially those helmed by Democrats, would likely follow suit if the DOL ultimately dilutes its fiduciary rule, some legal experts said.
"If they perceive a rollback of obligations, I would expect more states to step in at that point," said George Michael Gerstein, counsel at law firm Stradley Ronon Stevens & Young.