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SCAgent: Serious rhetorical question: Whats the difference between the suitability standards already in place vs. "best interest"...all of this seems ridiculous and hair splitting. Who cares if there are less carrier trips by the way.
DOL Executive Order Moves Forward - Affect on Annuity Sales
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The difference is in the legal definitions and the consequential lawsuits that will happen.
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You are right that it is splitting hairs often times. But then other times not so much. A lot has to do with full disclosure and documentation of commissions.
But a lot of it has to do with things that are clearly not in the best interest of the client. Example: A 65 year old is sold a 13 year IA with a 4% Cap from a B rated carrier at a 10% comp. If there is a 7 year IA that has a 4% Cap from an A rated carrier but it pays 4.5% comp.... then why was it not recommended?
If all things are relatively equal other than surrender period and compensation, then why recommend the longer surrender product?
But all we can do right now is make assumptions based on the unfinished proposal. Who knows what it will all shake out to be like. There will be numerous court cases spawned from this and they ultimately will have the largest impact on how this affects the industry. jmo
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"Suitability means selling a sweater that fits you. Fiduciary duty means it actually has to look good on you, too." - Michael Kitces
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When I'm thinking about this legislation, I have to think "what are they trying to fix?"
I think their perception is that they're trying to clamp down on pure salespeople who are trying to sell products with no regard to their total financial picture. As such, these salespeople are only concerned with winning sales contests. This may or may not be true, but perception is often reality.
So, how do WE show a fiduciary duty?
1 - Do a comprehensive financial analysis. Some software analysis may be helpful in this area.
2 - Complete a fact-find.
3 - Do your due diligence to determine quality companies offering quality products. Just because a product pays a high commission does not mean it is of high quality. Find products that are good and still pay a nice reasonable commission.
4 - Does your product solution fit their situation and what they want for their retirement funds?
Perhaps it is time to 'retire' the suitability (salesman) standard of care. However, it might be too much of a stretch to require a legal 'fiduciary' level of care.
I think that it's better to call it a "professionals standard of care" would be a fine middle ground between salesman (does it fit) and fiduciary (is it the absolute best available solution). If not, the fiduciary is supposed to recommend the store down the street, right?). The professional would simply ask "Do my products fit and look good on you?"
I think their perception is that they're trying to clamp down on pure salespeople who are trying to sell products with no regard to their total financial picture. As such, these salespeople are only concerned with winning sales contests. This may or may not be true, but perception is often reality.
So, how do WE show a fiduciary duty?
1 - Do a comprehensive financial analysis. Some software analysis may be helpful in this area.
2 - Complete a fact-find.
3 - Do your due diligence to determine quality companies offering quality products. Just because a product pays a high commission does not mean it is of high quality. Find products that are good and still pay a nice reasonable commission.
4 - Does your product solution fit their situation and what they want for their retirement funds?
Perhaps it is time to 'retire' the suitability (salesman) standard of care. However, it might be too much of a stretch to require a legal 'fiduciary' level of care.
I think that it's better to call it a "professionals standard of care" would be a fine middle ground between salesman (does it fit) and fiduciary (is it the absolute best available solution). If not, the fiduciary is supposed to recommend the store down the street, right?). The professional would simply ask "Do my products fit and look good on you?"
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Most recent news article I could find:
DOL fiduciary rule arrives at OMB
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However, this one is also closely related to insurance company b/d's:
Sale of AIG Advisor Group may signal wave of mergers ahead
DOL fiduciary rule arrives at OMB
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However, this one is also closely related to insurance company b/d's:
Sale of AIG Advisor Group may signal wave of mergers ahead
http://www.investmentnews.com/artic...ail&utm_campaign=investmentnews&utm_term=text
Read the article for information, the comments for entertainment.
Read the article for information, the comments for entertainment.
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Wow, you aren't kidding about those comments. Some of those exchanges rival stuff that goes on here in this forum! Lol
