DOL Fiduciary News: March 14, 2018
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Latest Wells Fargo flap underscores need for fiduciary standard
InvestmentNews; March 8, 2018 @ 10.01 am
The most recent scandal brewing at Wells Fargo Advisors, this one regarding questions from the Justice Department about potentially inappropriate recommendations on rollovers for 401(k) plan participants, underscores yet again why the financial advice industry needs a clear, simple fiduciary rule for all brokers and advisers and their clients.
Wells Fargo & Co., the giant bank that owns Wells Fargo Advisors, home to 14,544 brokers, revealed last Thursday that its board of directors had launched an investigation into certain investment practices in response to questions from the feds.
In light of the latest investigation at Wells Fargo, the Department of Labor's decision in November to delay the start of the enforcement mechanisms of its fiduciary rule looks particularly misguided.
At the time, the DOL said it was postponing till July 1, 2019, the legally binding contract between brokers and retirement-account clients that requires brokers to act in their best interests. That part of the DOL rule was supposed to take effect at the start of this year.
The financial advice industry had been waiting for the DOL fiduciary rule to be gutted since Donald J. Trump, a pro-business Republican, was elected president in November 2016.
Is title reform the answer to the fiduciary debate?
InvestmentNews; March 10, 2018 @ 8.00 am
Could clearing up the decades-old confusion over the role of a broker compared to that of an investment adviser be as easy as clarifying their professional titles?
So-called title reform has recently emerged as a serious consideration as the Securities and Exchange Commission sets out to put forth a proposal creating a new fiduciary standard in the financial advice industry.
To some, title reform offers a simple and straightforward solution. To others it is a dangerous concept that would create two tiers of advice-givers and spur some in the industry to come up with ways to work around the new rule.
Unlike the Labor Department's fiduciary rule, which jams investment advisers and brokers into one advice standard, title reform underscores the line separating an adviser, who is held to a fiduciary duty, and a broker, who meets the lesser suitability requirement. It aims to differentiate the two roles by limiting who can call themselves a "financial adviser," a label many brokers use on business cards and in advertising.
Is this the silver bullet we've all been waiting for? The fix would be an easy one, rather than requiring hundreds of pages of new regulations. In fact, it would even be based on existing rules. And it would be comprehensive, applying to anyone working with clients to improve their financial lives.
Appeals court upholds DOL fiduciary rule in case involving fixed indexed annuities
InvestmentNews; March 13, 2018 @ 5.16 pm
A federal appeals court upheld the Labor Department's fiduciary rule in a decision issued on Tuesday.
The 10th Circuit Court of Appeals ruled in favor of a Kansas district court that granted summary judgment to the DOL in a lawsuit filed by Market Synergy Group Inc., a Topeka insurance agency that develops fixed indexed annuities and other proprietary insurance products.
The firm argued that the DOL rule treated fixed indexed annuities arbitrarily by forcing the products under the best-interest contract exemption.