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DOL Fiduciary News: October 10, 2016

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Judge Rejects Further Arguments in Market Synergy-DOL Lawsuit

Best's News Service via Bestwire -- October 07, 2016 01:39 PM

KANSAS CITY, Kan. -- A federal judge said he needs no further oral briefings to decide whether he should immediately enjoin the implementation of parts of the U.S. Department of Labor’s conflict of interest fiduciary rule, which will become effective in April.

Judge Daniel D. Crabtree, of the U.S. District Court for the District of Kansas, previously had requested a status conference after oral arguments Sept. 21 in the case brought by Market Synergy Group Inc., an insurance agency licensed in Kansas, against the DOL.

Game Over for Broker Commissions

The Wall Street Journal; Oct. 7, 2016 8:35 p.m. ET

Wall Street’s days of taking commissions appear numbered.

Commission-paying accounts, long a staple of the brokerage industry, are problematic under the Labor Department’s so-called fiduciary rule because a key provision in the rule that permits the use of commission-based retirement accounts continues to be seen as too risky for some in the industry.

The rule, set to take effect in April, doesn’t extend to nonretirement accounts.

DOL fiduciary rule may finally spark lower fund fees for mutual funds 

InvestmentNews (editorial staff); Oct 9, 2016 @ 12:01 am

One might assume that the asset management industry wouldn't need something as momentous as the Department of Labor's fiduciary rule to start seeing the light on fees. But that appears to be the case.

Or, at least, we hope it will be the case.

As reported in InvestmentNews last week, lower fees and fewer mutual fund share classes are expected to be among the indirect by-products of the new fiduciary rule.

Schwab Reduces Fees on Five of its ETFs 

The Wall Street Journal; Oct. 7, 2016 8:41 a.m. ET

Charles Schwab Corp. has responded to a fee cut by BlackRock Inc. earlier this week by slashing prices on five of its exchange-traded funds, taking prices below some comparable products offered by the world’s largest asset manager.

The move by Schwab’s money management unit comes two days after New York-based BlackRock slashed fees at 15 of its ETFs, highlighting the intense price competition among large fund firms. Large fund providers in recent years have gone blow-for-blow on fees, seeking to attract some of the hundreds of billions of dollars investors have poured into low-cost index-tracking funds like ETFs in recent years.

American Funds Embraces a No-Load World

Morningstar; 10-06-16 | 06:00 PM

American Funds has broadened its reach by making its entire lineup available commission-free on the brokerage platforms of Fidelity and Schwab. Whether in a taxable or tax-sheltered account, retail investors can now bypass a load by buying the F1 shares of any American Funds offering. The minimum initial investment on the Fidelity platform is $2,500 and on Schwab it's $100. Although American Funds' F1 shares charge a 25-basis-point 12b-1 fee, which goes to the respective platforms, many are still competitively priced. For example, including its 12b-1 fee, American Funds New Perspective's fiscal 2015 net expense ratio was 0.81%, which ranked in the cheapest quintile of similarly distributed peers.

Alpine Brokerage Has Officially Filed an Application for Financial Institution Status Under the New DOL Fiduciary Ruling 

MARLTON, N.J., Oct. 10, 2016 /PRNewswire/ -- Alpine Brokerage, an independent fixed insurance wholesale marketing firm, has officially filed with the Department of Labor's Office of Exemption Determinations to become a financial institution. The firm is part of a select group in the U.S who has filed for this status, which if approved, would allow independent insurance agents to sell commission-based insurance and financial products under the Labor Department's Best Interest Contract Exemption (BICE).

The final version of the fiduciary rule published in April allowed only banks, insurance companies, broker-dealers and registered investment advisors to be considered as financial institutions by the Department of Labor. Although IMOs have contracts with independent agents, these firms were left out of the ruling because they are not regulated in the same way.

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