Final DOL Fiduciary Regulations

[DHK]

Under ERISA law that is regulated by the Department of Labor, there will be a BICE - Best Interest Contract Exception (to be signed by the client at the point of sale) that was definitely going to be required for variable annuity sales, but now that contract will also be required for fixed indexed annuity sales involving Qualified Plans - IRA, 401(k), Roth IRA, 403(b), etc.

No securities license required for fixed indexed annuities.

 

[pfg1]

Yeah I think that is the issue.
I don't know what the % is... but my guess is that the majority of FIA's are transfers of qualified funds from other retirement accounts. How this will ultimately be affected (for the agent) will be interesting. ???

 

[HealthGuy]

I think this is an issue as well. Dont or wont you ultimately going forward (in the future) need a Series 65 to "transfer qualified funds from other retirement accounts into a fixed indexed annuity? Somebody tell me I'm wrong about the ruling.

 

[scagnt83]

I think this is an issue as well. Dont or wont you ultimately going forward (in the future) need a Series 65 to "transfer qualified funds from other retirement accounts into a fixed indexed annuity? Somebody tell me I'm wrong about the ruling.

As as been stated already. That is wrong.
Being a Fiduciary and being a Registered Rep are two totally separate things.

Yes, a 65 is a Fiduciary. But a Fiduciary is not necessarily a 65. Business owners who start 401k plans for their business are Fiduciaries under ERISA.

This ruling has nothing to do with what license is needed to sell what products. It almost entered that territory without realizing it. But that is why they added the BICE clause that we keep talking about.

All this does is increase suitability requirements and increase an agents liability when stating factual inaccuracies or making misleading statements. It also will add an extra form or two to the application.


The phrase "FIAs are now lumped in with VAs" only refers to FIAs no longer being excluded under ERISA. It does not mean they are going to be considered a Security that only a Registered Rep can sell.

What that means is that before this ruling, agents were not considered Fiduciaries when selling a Qualified IA. Now they will be considered a Fiduciary when selling a Qualified IA, but exempted under the BICE clause... just like VAs are exempted under the BICE clause. All BICE does is create proper disclosures for the client and increase expectations about agent conduct and product suitability.


No new licensing will be required because of this ruling.

 

[walthamny]

Licensing is the same, however, FIA providers will be forced to give their best producers seminars at Motel 6 with double bunk beds under the reasonable compensation rule. I hope they keep the continental breakfast.

This has not been said yet, wouldn't have been easier for DOL to say 2 years ago, we want to regulate FIA's under ERISA instead of declaring war on 95% of the industry.

 

[scagnt83]

This has not been said yet, wouldn't have been easier for DOL to say 2 years ago, we want to regulate FIA's under ERISA instead of declaring war on 95% of the industry.

The driving reason behind this regulation had nothing to do with regulating FIAs under ERISA. FIAs were just caught up in the crossfire

FIAs were an after thought for the DOL when constructing this regulation. It was targeted at BDs and the mutual fund industry more than anything.

This has been the talk of the annuity industry for only the past 6 months to a year max. But the Securities industry, especially the BDs on a corporate level, have been talking about this for the past 2+ years now.

 

[Justin Bilyj]

Expect the E&O to cover indexed annuities to increase $1,000 additional per year imo.
I have already seen some E&O carriers raise it for FIAs previous to this rule so I can only imagine...

 

[DHK]

I am a NAIFA member. Nice group of people, BUT WEAK (at best) is what i would describe as their lobby. Their more of a continuing ed, social experience. Lobby for NAIFA???? Where were they?

http://www.advisortodayblog.com/ind...l-rule-reflects-the-power-of-naifas-advocacy/

Despite NAIFA's involvement, we still have a ways to go for some clarification:
The Five Best and Worst Things About the Fiduciary Rule - InsuranceNewsNet

 

[Brian Anderson]

NAFA today released a statement from its Executive Director Chip Anderson ripping the final rule after thorough review. From Anderson’s statement (more in the link below):

“…after reviewing the more than one thousand pages of documentation and accompanying commentary that constitute this rule, it is clear DOL did not address our concerns in any meaningful way, and in fact made matters far worse by subjecting fixed indexed annuities to the onerous best interest contract exemption (BICE). While DOL would like everyone to believe the rule has been improved to placate industry concerns, it appears the fundamental flaws of this rule remain, and treating fixed indexed annuities like securities products is completely objectionable.”

“…Given the rule’s far-reaching implications, and the hasty and arbitrary manner in which DOL suddenly threw fixed indexed annuities into BICE, NAFA is left with no choice but to explore any and all options available to fight this rule.”

Insurance Forums | NAFA board rips into final DOL Fiduciary Rule after review; considering legal challenges

 

[Norwayguy]

Mortgage companies loan out money and receive payments, generally based on the credit, character, and income of those who borrowed.

Annuity insurance companies receive money and pay out payments, based on the general account performance (or sub-accounts for variable contracts).

Apples and oranges my friend.

My only comment on trail commissions. If you get sued are the DOL comes after you anyone wanna bet if that is grounds for a for cause termination and there goes your income stream.