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DOL Fiduciary News: May 23, 2016

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DOL Rule Could Water Down Fiduciary Standard

Financial Advisor; May 20, 2016

Independent RIA firms could lose an important differentiator as the U.S. Department of Labor’s fiduciary rule forces the entire industry to raise standards of conduct, according to custodial-firm leaders speaking Thursday at the spring meeting of the National Association of Personal Financial Advisors in Phoenix.

“The word ‘fiduciary’ was something that differentiated you in the industry,” said Bernie Clark, head of Schwab Advisor Services.  “Now everyone will be using that word.”

DOL fiduciary rule compliance a worry for fee-only financial planners

InvestmentNews; May 22, 2016 @ 6:00 am

Fee-only advisers already follow the spirit of the Labor Department's new best-interest rule on retirement advice, but they are worried about additional compliance hoops they'll need to jump through to show regulators they are fiduciaries.

A couple of hundred fee-only financial planners packed a meeting room at the National Association of Personal Financial Advisors spring conference in Phoenix last Wednesday to get an update on the DOL's conflict-of-interest rule, which was finalized in April.

By the end of the session, most advisers looked concerned, or at least confused.

Wirehouses escape the worst of the DOL fiduciary rule

InvestmentNews; May 22, 2016 @ 6:00 am

While many financial advisory firms have hunkered down, unwilling to talk about the impact of the disruptive Labor Department fiduciary rule, the wirehouses have sought to reassure their shareholders that the sky is not about to fall.

Bank of America Corp.'s chief financial officer, Paul Donofrio, said during an earnings call last month that the Department of Labor's new rule will affect less than 10% of the $2 trillion in assets at its wealth management business. During Morgan Stanley's first-quarter earnings call, CEO James Gorman said of the DOL rule, “it's not the be-all and end-all” for the bank's brokerage business.

‘Befuddled’ Clients, Compliance Headaches Worry Advisors in Wake of DOL Fiduciary Rule 

ThinkAdvisor; May 19, 2016

A panel at the Envestnet Advisor Summit on Thursday addressed the concerns advisors have with the Department of Labor’s conflict of interest rule released April 6.

"Advocacy is a critical component of business success," Clarke Camper, senior vice president for government relations for Capital Group, the parent of American Funds, said during the panel. He noted that his mantra in meetings with regulators on the rule was choice. "We need to preserve choice for investors and we need to preserve choice for advisors" on what business model they want to use.

He said his clients have raised issues with the rule’s potential to drive more firms to the RIA model.

Don't let the DOL fiduciary rule's grandfathering provision trip you up 

InvestmentNews; May 20, 2016

The Labor Department gave advisers some wiggle room in its new fiduciary rule for the “grandfathering” of pre-existing investments in retirement accounts, but advisers should tread lightly — some believe it will be fairly easy to unknowingly run afoul of the rules.

The fiduciary regulation, which raises investment advice standards for retirement accounts such as 401(k)s and IRAs, gives advisers and brokers an exemption — called the “exemption for pre-existing transactions” — for any investment advice rendered prior to the rule's applicability date.

2016 seen as calm before the storm for annuity sales; Friday, May 20, 2016 1:46 PM ET

Survey data released by the LIMRA Secure Retirement Institute showed diverging trends in U.S. fixed and variable annuity sales during the first quarter, but it was the organization's outlook for the business rather than its recap of recent results that should have captured readers' attention.

Thanks in large measure to expected fallout from the U.S. Department of Labor's final fiduciary rule, the LIMRA institute projects that individual variable annuity sales will plunge by between 25% and 30% in 2017. It also foresees a decline in individual fixed annuity sales in 2017 of between 5% and 10%. Individual annuity sales overall are projected to fall by an estimated 15% to 20%.

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