DOL Fiduciary News: June 9, 2016
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Born in the USA: Fiduciary rule to be game-changer for American life market
Life Insurance International; 8 June, 2016
Worldwide insurance organisation, LIMRA, has warned that a new US Department of Labor (DoL) fiduciary rule will significantly impact life insurance players in the US.
The rule was finalised in April 2016 and is due to become effective in April 2017. According to the US Department of Labor (DOL), the final rule and related exemptions will protect investors by requiring all who provide retirement investment advice to plans, plan fiduciaries and IRAs to abide by a "fiduciary" standard -- putting their clients' best interest before their own profits.
Insurance groups ACLI and NAIFA sue DOL over fiduciary rule's impact on annuities
InvestmentNews; June 8, 2016 @ 4:09 pm
Insurance groups filed a lawsuit Wednesday against a Labor Department rule that would raise investment advice standards for retirement accounts, arguing that the regulation would stifle annuity sales.
The American Council of Life Insurers, the National Association of Insurance and Financial Advisors (https://www.acli.com/Newsroom/News%20Releases/Pages/NR16-025.aspx) and six NAIFA chapters in Texas brought the claim in the U.S. District Court for the Northern District of Texas.
The 105-page suit is the third in the last week designed to kill the DOL regulation, which would require financial advisers to act in the best interests of their clients in 401(k)s, individual retirement accounts and other qualified accounts.
Obama vetoes resolution against DOL fiduciary rule; court sets date for NAFA's lawsuit
InvestmentNews; June 8, 2016 @ 1:57 pm
President Barack Obama vetoed Wednesday afternoon a resolution to kill the DOL fiduciary rule, which was approved by the House in April and the Senate in May.
“This rule is critical to protecting Americans' hard-earned savings and preserving their retirement security,” Mr. Obama wrote about the Labor Department regulation raising investment advice standards for retirement accounts, in a message accompanying his veto. “The outdated regulations in place before this rulemaking did not ensure that financial advisers act in their clients' best interests when giving retirement investment advice. Instead, some firms have incentivized advisers to steer clients into products that have higher fees and lower returns — costing American families an estimated $17 billion a year.”
The House and Senate resolutions fell well short of the supermajorities required to override a veto.
Panel: Annuity Manufacturers Will Adapt
InsuranceNewsNet; June 8, 2016
WASHINGTON, D.C. -- Annuity manufacturers have always been a creative subset of the financial services industry.
While that creativity might have attracted the unwanted attention of regulators, it also will help the industry survive, a panel of experts said Tuesday at the Insured Retirement Institute's Government, Legal and Regulatory Conference 2016.
In particular, fixed indexed and variable annuities were targeted by the Department of Labor's fiduciary rule. Both will require a Best Interest Contract Exemption to be sold with current commissions. That means hefty disclosures and a legally binding commitment to act in the client's "best interest."
Advisory firms should prep for DOL fiduciary rule while court challenges proceed
InvestmentNews; June 8, 2016 @ 11:18 am
Advisers need to begin taking steps to abide by requirements of the 1,023-page DOL fiduciary rule due to be implemented by April 2017, even though the entire rule, or just part of it, could be thrown out by the courts. That was the conclusion of a securities industry panel speaking at the Pershing Insite conference in Orlando on Tuesday.
“Now is the time to do a thorough inventory of clients, going account by account,” said Dale Brown, chief executive of the Financial Services Institute. “You need to end up with a clear understanding of which client accounts will be impacted by this rule.”
BNY Mellon's Pershing Launches New Solutions and Resources to Help Firms Comply with the DOL Conflict of Interest Rule
ORLANDO, Fla., June 8, 2016 /PRNewswire/ -- Pershing LLC, a BNY Mellon company, today announced its solutions and resources to help financial services firms comply with the Department of Labor's (DOL) Conflict of Interest rule. Over the past 18 months, Pershing has been working to help firms understand the rule and developing solutions, which it will soon start to roll out.
"While some aspects of the final version of the DOL's Conflict of Interest Rule will be easier to implement than the initial proposal, the essence of the rule is the same and it could profoundly change financial services firms' operating models, compensation arrangements and supervisory structures," said Rob Cirrotti, managing director and head of retirement and investment solutions at Pershing. "We've identified various needs that have emerged as a result of the new rule and have been working to develop solutions to help our clients achieve success in this regulatory environment. The combination of our new and existing tools helps our clients operate as fiduciaries."