DOL Fiduciary News: September 19, 2017
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ACLI and NAIFA Fear New DOL Attacks on Commissions
ThinkAdvisor; September 18, 2017
Life insurance groups are wondering whether the U.S. Department of Labor will put off enforcing the current version of the fiduciary rule, then come back with new regulations that continue what the groups see as an attack on commission-based life insurance and annuity product distribution efforts.
James Szostek and Howard Bard told the DOL, on behalf of the American Council of Life Insurers, to get away from the idea of favoring certain types of retirement services, or certain types of retirement services compensation arrangements.
“Exemptive relief should be available regardless of whether the compensation earned follows a recommendation regarding an annuity, a share of stock, a bond, a bank CD or mutual fund and regardless of whether the fiduciary provides services on a fee-for-service or commission basis," the Szostek and Bard write in a comment letter.
DOL Fiduciary Rule Delay All but Certain as Comment Period Closes
ThinkAdvisor; September 15, 2017
While detractors of the Labor Department’s plan to delay the remainder of its fiduciary rule continued to tell Labor that such a delay would be costly for investors, supporters of the delay argue that it’s all but needed in order to make revisions, propose new streamlined exemptions and coordinate with the Securities and Exchange Commission.
Labor on Aug. 31 set a 15-day comment period for its proposed 18-month delay — from Jan. 1, 2018 to July 1, 2019 — to the more onerous prohibited transaction exemptions of its fiduciary rule. The comment period expired Friday.
With comments both for and against a delay in hand, all bets are on Labor forging ahead with the 18-month delay.
“DOL needs to propose its changes to the [best-interest contract] exemption and related exemptions,” said Steve Saxon, partner at Groom Law Group in Washington. “In order to obtain comments on these changes and hold hearings, DOL would need to offer these changes this fall to give providers time to get ready before July 2019.”
Nevada fiduciary law raises concerns among retirement professionals, brokerage industry
InvestmentNews; Sep 18, 2017 @ 1:27 pm
A new Nevada law expanding the fiduciary responsibilities of certain financial professionals could have implications well beyond the border of the Silver State, supporters and critics agree — for significantly different reasons.
Enacted in July, the law places fiduciary responsibilities on broker-dealers, registered investment advisers and some financial services sales representatives. Previously, these professionals were excluded from the existing state law covering the fiduciary duties of "financial planners."
The impact on retirement plans, institutional investors and individual investors remains uncertain pending regulations to implement the law amid critics' arguments that it conflicts with the Employee Retirement Income Security Act as well rules set by the Securities and Exchange Commission. The law appears to be the first of its kind at the state level, but that's little comfort to critics.
Fiduciary Rule Applies To Health Savings Accounts
InsuranceNewsNet; September 18, 2017
The Department of Labor (DOL) fiduciary rule does not apply only to products such as annuities. The rule also applies to health savings accounts (HSAs).
An alert sent out by The Wagner Law Group states that those who provide advice on HSAs may be considered fiduciaries subject to the DOL rule if their communications rise to the level of investment recommendations.
The DOL rule generally defines “investment advice” to include the following:
- Recommendation to buy, sell hold or exchange investments or how to invest assets rolled over, transferred or distributed from a retirement plan or individual retirement account (IRA).
- Recommendations concerning the management of retirement plan or IRA assets or rollovers, transfers, or distributions from a retirement plan or IRA.
Transition period on DOL rule spawns compliance confusion
BenefitsPro; Sep 18, 2017
Retirement advisors are less than confident about exactly how to be compliant during the transition period for the Department of Labor’s fiduciary rule—and even though full implementation of the rule has been delayed, there are still actions they need to take.
Financial Advisor IQ reports that some advisors are receiving different, and sometimes conflicting, advice from different lawyers. The rule requires advisors to inform investors of any potential conflicts of interest and have their clients sign a Best Interest Contract Exemption document if the advisors receive variable compensation for providing retirement advice.
But until the rule is fully implemented on July 1, 2019 (barring any changes to that date following a DOL review of the rule), advisors have other responsibilities. During the transition period, according to the report, retirement advisors who expect to make use of the BICE are required to comply only with so-called Impartial Conduct Standards (ICS). Those specify that BICE users must “adhere to basic fiduciary norms and standards of fair dealing.”