As you likely know, the hot issue in the industry right now is the proposal by the Department of Labor (DOL) to change and revamp the definition of “fiduciary” with the intention of protecting investors from conflicting investment advice and imposing a uniform standard. The definition would make all advisors, including insurance agents, fiduciaries and would redefine the 1975 ERISA law currently in place to impart “fiduciary duty” on all those advisors involved with qualified money sales and recommendations, including IRAs.
In short, the DOL’s proposed rule will:
- Create new, unworkable exemptions for financial transactions
- Require advisors to offer clients a mix of financial products that would be in their “best interests,” without guidance on how the standard would be met
- Require no more than “reasonable compensation,” which could significantly reduce or even eliminate all commissions
- Allow the IRS to declare any violations of these new standards and subject you to new fines, penalties and damages
In its current state, we believe legislators, regulators and policymakers need to withdrawal or re-evaluate the proposal because of the devastating impact it will have on not only our industry, but the main-street consumers as well. Due to the new mechanisms created by the proposal, the risk of class-action lawsuits will make serving consumers with low-net assets too risky, and as a result, those consumers will go unserved. The current provisions will likely make E&O insurance costs increase greatly and will make it far too costly for many advisors to stay in practice.
With more than 65% of all annuity sales being qualified money, we understand this rule impacts a substantial segment of your sales and because of this, are adamantly opposed to the new rule. We are actively advocating against it for you in conjunction with the National Association for Fixed Annuities (NAFA), and will be updating our blog on an ongoing basis as developments occur and rulings are made.
We strongly encourage you to stay in the know and regularly check back here and with your CreativeOne sales team at 800.992.2642. Please listen to our internal webinar with NAFA’s executive director, Chip Anderson and our senior vice president of national accounts, Chris Conroy to learn how the proposal will affect you and what you can do to combat it.
FOR FINANCIAL PROFESSIONAL USE ONLY. NOT FOR USE WITH THE GENERAL PUBLIC. CP-0475 – 2015/8/24