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How the DOL proposal could impact you

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The proposed DOL fiduciary rule has been weighing heavy on the industry’s mind since it was introduced back in April. Some sides say it will have a significant negative impact on advisors and insurers that sell annuities while others feel the claims are overblown. Here at the 2015 Advisor Network Summit, the feeling was a bit of anger mixed with caution when the topic of the proposed rule came into play. 

Chip Anderson, executive director of NAFA, spoke at length on the issue.

Anderson reminded those in attendance that, in theory, the proposed rule is intended to protect retirement savings, impose a uniform standard and eliminate conflicts of interest. But some say that, as written, the consequences for advisors, agents and insurance companies could be dramatically different.  

“This proposal is supposedly helping the clients,” Anderson exclaimed during his presentation. “This DOL proposal is probably going to do just the opposite, however.”

Anderson went on to show the difference between the old definition of “fiduciary” and the new, proposed definition.

First, the old

Definition of fiduciary under 1975 ERISA (current law): Regulation 29 CFR 2510.3-21(c) defines the circumstances under which a person renders “investment advice” to an employee benefit plan within the meaning of section 3(21)(A)(ii) of ERISA. A person who renders “investment advice” under the regulation, and receives a fee or other compensation, direct or indirect, for doing so, is a fiduciary under section 3(21)(A)(ii).

A person is a fiduciary if he/she does not have discretionary authority over plan assets and who for compensation:

  1. Gives advice as the value of securities or other property

  2. On a regular basis

  3. Pursuant to a mutual agreement that the advice will;

  4. Serve a primary basis for investment decisions; and

  5. The advice is individualized (to the particular needs of the plan).

Now, the new

The 2015 proposed rule expands who would be considered a fiduciary by removing the “regular” and “primary basis” (numbers 2 and 4) from the definition. “Now it could be just one-time advice that is merely used ‘for consideration’ by the consumer,” Anderson said. For example, handing an annuity information brochure to a client or prospect.

So what is being done to implore the DOL to revise the proposed rule? Anderson told the audience that NAFA has done the following:

  • Established a working group responsible for addressing initiatives related to the issue.

  • Sponsored many visits to Washington, D.C., including member meetings with Congressional representatives in June.

  • Organized and participated in a face-to-face meeting with the DOL in D.C. in July.

  • Officially filed its public comment letter July 21.

  • Currently working with other trade groups and associations to protect member interests.

“The meeting with the DOL went very well and we thought it was the best possible outcome of that situation,” Anderson explained to the crowd, as he urged everyone to take action alongside NAFA.

So what can you do? According to Anderson:

  • Be knowledgeable of the issue as it progresses.

  • Join with NAFA and other groups working to protect your interests (go to for up-to-date information).

  • Be prepared to participate in grassroots efforts led by NAFA and fellow trades if/when necessary.

  • Write to your members of Congress expressing your concerns.

“You need to be informed on how this issue works,” said Anderson. “You need to tell five or 10 people to get them involved. Follow the info on the NAFA website. Become a member of one of the organizations that is working on this. This is not a good situation for anyone in the investment business. It’s extremely important.”

Read more of LifeHealthPro’s coverage of the 2015 Advisor Network Summit here.

See also:

DOL fiduciary rule opponents shift strategy

NAFA: Congresswoman Ann Wagner will ‘punch a bear’ to halt DOL

Credit Suisse cites impact of fiduciary rule on insurers


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