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DOL Fiduciary News: June 22, 2016

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Jackson National's new variable annuity hints at annuities' future post-DOL fiduciary rule

InvestmentNews; June 21, 2016 @ 1:47 pm

Annuity behemoth Jackson National Life Insurance Co. is currently developing its first-ever fee-based variable annuity product, offering a hint as to where the annuity market could be headed due to the market shake-up caused by a new Labor Department regulation affecting retirement accounts.

The Department of Labor's fiduciary regulation, which raises investment advice standards in retirement savings vehicles such as 401(k)s and IRAs, is expected to negatively impact sales of variable annuities sold on a commission basis in qualified plans, due to the additional compliance and litigation risk associated with such a transaction.

Some Life Insurance Sales Covered by DOL Rule

InsuranceNewsNet; June 21, 2016

Life insurance is the forgotten transaction in ongoing debate over the Department of Labor’s fiduciary rule.

The impact on variable and fixed indexed annuities is dominating news coverage. The stories usually note the impact on IRAs, 401(k)s, investment education, mutual funds and many other aspects of the industry.

But life insurance sales are affected as well. Some life insurance closely mimics market-tied annuities. For example, indexed and variable universal life are similar to FIAs and VAs.

DOL Rule Putting Big Hurt On Structured Products 

Financial Advisor; June 21, 2016

Sales of structured products have slowed this year, possibly due to the U.S. Department of Labor’s fiduciary standard that is set to take effect next year.

The total dollar amount of new issues of U.S. structured retail products through May was about $42 billion, down around 25 percent from last year on an annualized basis, according to Thomas Selman, executive vice president of regulatory policy at the Financial Industry Regulatory Authority.

DOL Fiduciary Rule: Who Wins, Who Loses 

ThinkAdvisor; June 21, 2016

Around $3 trillion of advised, commission-based brokerage IRA assets will be subject to the Department of Labor's new fiduciary rule, reshaping the financial industry, Morningstar has concluded.

At the Morningstar Investment Conference in Chicago, panelists outlined a recent Morningstar report that shows the positive and negative monetary impacts the DOL fiduciary rule will have on the industry.

DOL rule may underestimate 401(k) inflexibility for decumulation strategies; June 21, 2016

By raising the standard on advisors recommending IRA rollovers to a fiduciary level of care, the Department of Labor’s fiduciary rule may restrict assets in 401(k) plans from flowing to IRA accounts, according to the latest edition of the Cerulli Edge, published by global analytics firm Cerulli Associates.

While the Boston-based firm “strongly agrees” with the intention to raise financial advisors’ standard of care and protect retirement investors from conflicts of interest, the rule’s implicit belief that employer-sponsored plans are the optimal place for retirement savers may have unintended consequences as investors seek to convert accumulated savings to income in retirement.

Fiduciary FAQs Part Two: Practical Insights for Advisors [Principal]

June 21, 2016 10:55 AM EDT

DES MOINES, Iowa -- (BUSINESS WIRE) -- Principal Financial Group® has again partnered with Groom Law Group to answer common questions on the Department of Labor’s final fiduciary rule, this time focusing on practical insights for advisors.

“Advisors continue to have questions. Now that we know a bit more about what the regulatory package may look like in practice, we’re highlighting the top questions we’re hearing from advisors about how it might impact their businesses,” said Greg Burrows, senior vice president of retirement and income solutions at Principal®. “We’re continuing our analysis and remain committed to helping advisors navigate the changes ahead.”

With DOL rule in place, robo-advisers' fiduciary responsibility enters spotlight; Tuesday, June 21, 2016 11:31 AM ET

Many in the investment management space expect the Department of Labor's Conflict of Interest Rule, known as the fiduciary rule, to make providing advice to small-balance accounts unprofitable, leading advisers to drop clients who would most benefit from sound financial planning.

The DOL rule was top of mind for many at the Morningstar Investment Conference in Chicago. Most of the financial advisers attending the conference will be directly impacted by the rule, which has a final implementation deadline of Jan. 1, 2018. The rule requires advisers to hold a fiduciary responsibility to clients, which entails acting in their best interest whenever choosing investments or financial products or helping them plan for large purchases or tackle debt. The rule also shifts adviser compensation toward fees based on assets and away from the product-based commissions currently used for some accounts.

John Oliver vs. Congress: Which One Do You Trust with Your Retirement? 

Bloomberg; June 21, 2016 — 1:33 PM EDT

Congress is trying once again to overturn a U.S. Department of Labor rule that tightens the regulations on financial advisers, as the U.S. House of Representatives prepares to vote Wednesday on the red hot "fiduciary rule."

In one corner is House Speaker Paul Ryan. “Bureaucrats in Washington, D.C., have no business getting between you and your financial planner,” the Wisconsin Republican said in April, the last time the House took up the rule, which Ryan and other Republicans call “Obamacare for financial planning.”

In the other corner is President Barack Obama, many retirement experts, and, as of earlier this month, comedian John Oliver. Advocates say the rule, by requiring financial advisers to put their clients’ interests first when handling retirement accounts, will help protect savers from conflicts of interest that cost them $17 billion a year.

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