Skip to content

DOL Fiduciary News: October 6, 2017

Please Note:

These links will take you directly to the homepage of the website that features the article.

To reach the article directly, copy and paste the article title into the search feature on the homepage of the publication website.

Consumer Federation of America claims brokerage firms may be violating DOL fiduciary rule

InvestmentNews; Oct 5, 2017 @ 2:30 pm

The Consumer Federation of America is calling on multiple regulatory bodies to "investigate potential rule violations related to broker-dealer firms' improper implementation" of the Department of Labor's fiduciary rule.

In letters sent this week to Labor Secretary Alexander Acosta, Securities and Exchange Commission Chairman Jay Clayton, and Finra CEO Robert Cook, the CFA challenges as improper the brokerage industry's recent practice of "shifting retirement savings into fee accounts when they would be better off in commission accounts."

In each of the three letters, which are similar but not identical, the CFA quotes a recent SEC comment letter from Fidelity Investments that claims the DOL rule is forcing investors to "pay an asset-based fee to receive exactly the same services that were previously provided to them for no additional fee under a transaction-based fee structure."

"If a firm has commission-based and fee-based available, the rule requires it to recommend what is best for the customer," said Barbara Roper, CFA's director of investment protection.

House GOP Members Press Fight Against DOL Rule

Insurance News Net; October 5, 2017

While the most disliked aspects of Department of Labor fiduciary rule are expected to be officially delayed any day now, lawmakers continue to push legislative alternatives.

Last week, Rep. Ann Wagner, R-Mo., introduced a bill to create a new advisory standard somewhere between fiduciary and suitability. It would amend the Securities Exchange Act of 1934 to include a best interest standard of care for brokers advising investors in the retail market.

The Wagner bill joins legislation reported out of the House Committee on Education and the Workforce in July.

The Affordable Retirement Advice for Savers Act rolls back the Obama administration’s fiduciary rule and amends federal law to require financial advisors to act in the best interests of their clients.

Don't Mess Up a Good Thing [FIAs]

Retirement Income Journal; October 5, 2017

One of the most intriguing consequences of the Department of Labor’s fiduciary rule (the Obama administration version) has been the introduction of so-called fee-based or no-commission versions of one of the best-selling insurance products: fixed indexed annuities (FIAs).

The fee-based versions differ from commission-paying FIAs in important ways. The cost of distribution (i.e., agent commissions) doesn’t get built into the product’s interest-crediting formulas, so they offer the end-client more attractive interest-crediting terms.

Fee-based FIAs also enable Registered Investment Advisors (and the investment advisor representatives, or IARs, who work for them) to sell FIAs to IRA clients without having to comply with the DOL’s “best interest contract exemption,” or BICE, which singles out the commissioned-based sales of indexed annuities, variable annuities, and mutual funds to IRA clients for tighter regulation. 

Did you accomplish the goal of your visit to our site?

Yes No