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Fiduciary Rule Is Now (Partially) in Effect
The Wall Street Journal; June 9, 2017 5:30 a.m. ET
WASHINGTON—When President Donald Trump took office, many in the financial industry were confident that a looming retirement-savings rule they had opposed for years would soon be dead. To their dismay, the core principle of the rule was implemented Friday.
The resilience of the so-called fiduciary rule is partly attributable to delays in appointing senior officials at the Labor Department, the rule’s creator, who would be capable of unwinding a major regulation so close to its implementation, according to industry representatives and consumer advocates involved in the process.
Labor Secretary Alexander Acosta didn’t take up his post until late April, after Mr. Trump’s first pick for the role withdrew from consideration. Other top positions at the Labor Department remain vacant, leaving career officials—who had helped to write the original rule—to shepherd a review of the rule that the president requested in February
As Fiduciary Rule Phases In, Now What?
The Wall Street Journal; June 9, 2017 5:30 a.m. ET
A landmark retirement-savings rule’s fate remains uncertain, but one thing is clear: Starting June 9, retirement savers are entitled to investment advice that serves their best interest.
…Investors can expect changes to how their money is handled, the investment options they have and how they pay for advice. The degree of change will vary by firm and by account, and much will depend on how the Labor Department’s review plays out. Here are some things to watch:
What happens June 9?
As of Friday, brokers and insurance agents must adhere to the best-interest standard, or the spirit of the fiduciary rule. That means advice must be based on clients’ interests, rather than the financial interest of the adviser or firm. It also means brokers can charge no more than “reasonable compensation” and have to offer up more transparency around the compensation they earn, the transactions they make and potential conflicts of interest.
Bill to Kill Dodd-Frank, Repeal Fiduciary Rule Passes House
ThinkAdvisor; June 8, 2017
After nearly four hours of debate on Thursday, the House passed the Financial Choice Act, legislation designed to replace the Dodd-Frank Act, derail the Department of Labor’s fiduciary rule and gut the Consumer Financial Protection Bureau.
Democrats, who consistently referred to the legislation as the Wrong Choice Act during the heated debate on the House floor, offered no amendments to the bill, which passed by a 233-186 vote.
“Every promise of Dodd-Frank has been broken,” said House Financial Services Committee Chairman Jeb Hensarling, R-Texas, after the vote, referring to letters he’s received from Americans who were declined home, automobile and small business loans due to “Dodd-Frank’s burdensome regulations.”
The disclosure 401(k) advisers may be missing under the DOL fiduciary rule come June 9
InvestmentNews; June 8, 2017 @ 5:24 pm
When the Department of Labor's fiduciary rule kicks in June 9, previously non-fiduciary advisers to 401(k) plans will need to furnish important new disclosures to their clients acknowledging their newly minted fiduciary status.
The kicker: The action isn't mandated by the fiduciary rule itself, but another retirement rule already on the books. And failure to provide the disclosures could lead to some nasty repercussions for advisers and broker-dealers.
Bruce Ashton, a partner at Drinker Biddle & Reath, said the disclosures are a "big deal."
Fiduciary rule leads to costly changes, protests at 13 top firms
Financial Planning; June 08 2017, 3:08pm EDT
The fiduciary rule has transformed the way wirehouses, broker-dealers and banks do business with their retirement clients.
While the Department of Labor’s regulation has roiled the entire industry, firms including Merrill Lynch, JPMorgan Chase and Ameriprise have made some of the most far-reaching and costly changes.
Financial Planning analyzed 13 top firms’ compliance plans and public statements about the rule. Certain elements are slated to go into effect June 9, with the rest Jan. 1.
All firms that submitted a comment to the agency called for delaying the rule, if not for outright repeal. Many top executives publicly supported the spirit of the regulation. Yet, few, if any, said they backed the initial April deadline or the subsequent June date (a few called for additional delays).
Morningstar Enters the Indexed Age
Retirement Income Journal; Thu, Jun 08, 2017
Responding to demand from broker-dealers who intend to sell indexed annuities under the Department of Labor’s Best Interest Contract Exemption, Morningstar Inc. has added new data and new functionality to its Annuity Intelligence unit. Morningstar began rolling out the new services in April.
The Chicago-based firm, best known for mutual fund research, is adding information on 284 fixed deferred and fixed indexed contracts from 29 fixed and indexed annuity providers to its existing variable annuity database, once known as VARDS. Advisors can use the data to compare products or screen them for suitability for each client.