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State insurance regulators look to DOL fiduciary rule as they mull changes to annuity sales standard
InvestmentNews; Jun 13, 2017 @ 2:15 pm
State insurance regulators are using the Labor Department's fiduciary rule as a benchmark as they begin to mull changes to the annuity sales standard they oversee.
The DOL rule, part of which was implemented last week, requires advisers to act in the best interests of their clients in retirement accounts. Annuity sales are governed by a suitability standard that has been adopted by almost every state. Similar to the suitability rule for brokers that Finra regulates, the one for annuities requires sales professionals to take into account a client's risk tolerance, age, liquidity needs and other factors, but is less stringent than the DOL rule.
Recently, the National Association of Insurance Commissioners formed a working group to take a fresh look at annuity suitability and consider making it a best-interests standard.
"If that makes some sense, and we can model by our existing suitability rules to reflect something along the lines of a best interest, we should do that," Ted Nickel, Wisconsin insurance commissioner and NAIC president said Tuesday at an Insured Retirement Institute conference in Washington. "We've seen what's happened nationally, and we want to make sure we have uniformity and consistency at the state level."
OneAmerica Releases Adviser-Friendly Revenue Accounts
PLANADVISER | June 13, 2017
The OneAmerica revenue accounts allow advisers to move from commission-based compensation to a fee-based structure.
As the Department of Labor's (DOL) fiduciary rule undergoes its first days of implementation, the retirement and financial services industry is pushing efforts to increase transparency around fees and potential conflicts of interest. In response, OneAmerica is rolling out what it calls adviser-friendly “revenue accounts.”
Created at the plan level, these accounts can be used to pay an adviser’s fee without the need for deductions from individual participant accounts. Commission amounts are credited to the plan’s revenue account under the OneAmerica recordkeeping system before being withdrawn and paid to the adviser as a fee.
“By doing so, we can pay that same amount to an adviser as a fee rather than a commission,” Terry Burns, assistant vice president of products and investments for OneAmerica Retirement Services, tells PLANADVISER. The arrangement is less conflicted, the firm argues, because the fee is agreed to in advance and will not vary depending on the specific product recommendations made.