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DOL Fiduciary News: October 18, 2016

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ACLI Attorneys Ready for Legal Challenge Against DOL Fiduciary Rule

Best's News Service via Bestwire -- October 17, 2016 03:00 PM

WASHINGTON -- Attorneys for the American Council of Life Insurers are preparing for oral arguments next month in a lawsuit that questions the legality of the U.S. Department of Labor’s fiduciary rule update, which they say will upend the retirement advice industry.

“We are in the early days in an important piece of litigation in which there are dramatic consequences for the economy, for your businesses and for investors,” David Ogden, an attorney representing the ACLI in the DOL lawsuit, said at the ACLI Annual Conference held in Washington D.C. “We argue that DOL’s over-broad interpretation of a fiduciary is unreasonable and is contrary to the law.”

Some firms opting to sell fixed annuities under best-interest contract exemption to keep trips, bonuses intact 

InvestmentNews; Oct 17, 2016 @ 1:36 pm

Some financial institutions are opting to sell certain types of fixed annuities under a stricter compliance regime of the Labor Department's fiduciary rule than is necessary, in order to continue to offer incentives such as bonuses and trips.

The Department of Labor rule, which raises investment advice standards for retirement accounts, allows for forms of variable compensation such as commissions and bonuses it believes could lead to conflicted investment advice.

Bank of America CFO says decision to stop paying IRA commissions won't incite Merrill Lynch brokers to quit

InvestmentNews; Oct 17, 2016 @ 12:37 pm

Bank of America Corp.'s chief financial officer Paul Donofrio on Monday dismissed the notion brokers working for its Merrill Lynch brokerage unit will defect en masse because of the firm's decision to stop paying commissions on individual retirement accounts.

The bank announced earlier this month that it won't use the rule's best-interest contract exemption, and that beginning in April, it will stop providing new brokerage-based IRAs in order to comply with the Labor Department's fiduciary rule. The decision will benefit clients and advisers, Mr. Donofrio said during its third-quarter earnings call Monday with analysts.

Jackson National Launches a Fee-Based Variable Annuity

Financial Advisor; October 17, 2016

In late September, as many insurance providers were scurrying to meet the Department of Labor's new requirements for variable annuities, Jackson National Life Insurance Co.—a big annuity provider—announced that it was releasing its first fee-based VA.

Called “Perspective Advisory,” it's specifically designed in reaction to the new fiduciary standard, which in the interest of full disclosure requires that all VAs sold on a commission basis, rather than a fee basis, secure a best-interest contract exemption (BICE) from every client to guarantee there is no bias and make plain all the costs and fees. (The standard applies to fixed-indexed annuities, too.)

The fee-based versions of these products, however, are exempt from the BICE requirement.

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