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DOL Fiduciary News: November 6, 2017

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Is DOL Using A Back Door To The Kill Fiduciary Rule?

Financial Advisor; November 6, 2017

The Consumer Federation of America is calling out the Department of Labor on its proposal to delay full implementation of its fiduciary rule another 18 months, saying the delay is a thinly veiled attempt to kill the investor protection rule using a backdoor mechanism not found in law.

Executives of the watchdog group are keeping all avenues of redress against the DOL open—including a possible lawsuit.

“If they finalize the rule as they've proposed it, then there is a strong likelihood that we would sue,” said Micah Hauptman, the CFA’s financial services counsel, in an interview with Financial Advisor. “We're not ruling anything out, and all options are on the table, but we need to see the final rule before we make a final decision about whether we'd sue.”

The CFA is responding to the DOL’s filing of a proposed rule with the Office of Management and Budget yesterday to delay full implementation of the rule from January 1, 2018, to July 1, 2019. 

DOL Delay Loosens Vise on Annuities

InsuranceNewsNet; November 6, 2017

An 18-month delay in implementing key parts of the Department of Labor (DOL) fiduciary rule has eased its vise-like grip on insurers and annuity distributors, insurance company executives told analysts.

Abating regulatory pressure around annuity transactions also should give life insurers and distributors more time to shape a rule in a manner that will help retirement savers, the executives said during third quarter earnings conference calls.

“I think this pause plus the distance from June 9 is beginning to ease the impact of the DOL from a sales standpoint,” said Dennis R. Glass, president and CEO of Lincoln Financial.

Before the June 9 implementation of the fiduciary rule's initial clauses, advisors and distributors told insurers they wanted to continue selling life and annuity products, said Eric Steigerwalt, president and CEO of Brighthouse Financial.

SEC Chairman Jay Clayton's quest to forge a fiduciary standard

InvestmentNews; Nov 4, 2017 @ 6:00 am

In his first month as chairman of the Securities and Exchange Commission, Jay Clayton put the wheels in motion to formulate a uniform fiduciary standard for brokers and investment advisers, something that eluded his two direct predecessors and which supporters and critics alike agree could be a herculean task.

Sworn in on May 4, Mr. Clayton released a request for comment on fiduciary duty on June 1, making it one of his first official actions. And in October, he told lawmakers that the SEC staff was already drafting a fiduciary proposal.

But in taking the fiduciary rule by the horns, Mr. Clayton is grabbing hold of a bull that could wind up goring him. He'll have to navigate strong passions on both sides of the fiduciary debate, which has roiled the financial advice industry and in the past split the five-member SEC.

Mr. Clayton's alacrity in addressing fiduciary duty is partly being driven by the Labor Department's work on its own fiduciary rule, which was partially implemented in June and its enforcement mechanisms are now under a review ordered by President Donald J. Trump. That review could lead to substantial revisions or possibly a repeal.

The Heat Is on in the Hybrid Annuity Market

InsuranceNewsNet; November 3, 2017

Competition in the fast-growing hybrid annuity market is about to get fierce, the CEO of a life and annuity company said.

But all competitors are welcome, said Eric Steigerwalt, president and CEO of Brighthouse Financial, a big seller of hybrid annuities.

The hybrid annuity “is a great product for manufacturers, it’s a great product for distributors, it’s a great product for our clients – so growing that business, I think, would be great,” Steigerwalt said in an analyst conference call. “We welcome the competition. We know there’s going to be some in 2018.”

Hybrid annuities, sometimes called buffer or structured annuities, combine the elements of an indexed annuity and a variable annuity.

They protect, or buffer, contract holders from market downturns to a limited extent in exchange for higher caps on interest credited to the policyholder.

Litigation Risks Rise for Retirement Plan Advisors, Says Consultant

Financial Advisor; November 3, 2017

Financial advisory firms, particularly smaller ones, are going to face more litigation risks as the details of the Department of Labor fiduciary rule are implemented, says Suzanne E. Miscik, the vice president of retirement plan and fiduciary services for Northeast Professional Planning Group Inc. in Red Bank, N.J.

“The IRS is going to be looking at the administration of retirement plans to see if everything is being carried out properly” to meet all the federal regulations, says Miscik. “In addition, we are becoming a more litigious society, so more retirement plan participants are going to sue retirement plan sponsors and advisors and the companies providing the plans.

“I don’t want to scare advisors who deal with retirement plans, but I want to educate them to what is possible,” she said following her presentation, “Smart Fiduciaries—Rules of the Role.”

Miscik was a keynote speaker at the Financial Planning Association of New Jersey’s annual conference at William Paterson University in Wayne, N.J., on Thursday.

Fund Managers Respond to Shifts in Adviser Market

PLANADVISER | November 03, 2017

Data from the November 2017 issue of The Cerulli Edge – U.S. Edition demonstrates the ongoing centralization of investment influence in the hands of the home offices of large broker/dealers and registered investment advisers. 

The research is presented mainly for the benefit of asset managers, but there are important implications for the advisory audience. As Cerulli researchers explain, nearly three-quarters of fund manager wholesalers polled consider broker/dealers' centralization of investment decisionmaking to be an emerging challenge that could threaten and redefine the way they do business.

“The convergence between retail and institutional markets is causing asset managers to shift their distribution structure," explains Marina Shtyrkov, an analyst at Cerulli. "Some of the most attractive opportunities they see in the retail financial landscape resemble an institutional sale. In response, asset managers are reassessing how their distribution teams are interfacing with the different pockets of the market.”

This new research follows previous Cerulli analyses showing home-office discretion over advisory clients' investment exposures will increase significantly under the Department of Labor (DOL) fiduciary rule and other competitive pressures. 

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