The DOL is doing what it can to postpone enforcement of the rule itself, and of the “prohibited transaction exemptions,” or batches of formal guidance, that could apply to annuities and other insurance-based products used in retirement planning arrangements.
But time passes, elections come, and DOL officials change. Officials at the DOL, or the U.S. Securities and Exchange Commission, eventually could return with another version of the rule.
What Your Peers Are Reading
Some life insurance agents appear to be resigned to the idea that the rule could return, and interested in giving federal regulators advice about how to make DOL Fiduciary Rule II more compatible with their efforts to insure clients against outliving their retirement assets.
Here’s a look at five ideas life agents and other financial professionals gave the DOL in comments on the department’s recent proposal to delay enforcement of the rule exemptions that apply to annuity distribution arrangements. These are drawn from a collection of comment letters the DOL posted here.
1. Be practical about how long it takes to implement any new requirements.
Andrew Payne, the general counsel of Leawood, Kansas-based Creative One Marketing Corp., points out that the DOL had made final regulations for banks, broker-dealers and registered investment advisors available in April 2016, but, as of mid-September, still had not released final rules for the kinds of independent market organizations that distribute indexed annuities.
“It will be impossible for IMOs to reach a full level of compliance by January 1, 2018, considering these circumstances,” Payne writes.
He notes that Creative One handles about 10,000 annuity applications per year.
To meet a full-blown fiduciary rule standard, the company would probably have to hire two to six people, and, possibly, more, to conduct fiduciary rule reviews.
Hiring those people could take at least 90 to 120 days, and the cost of each hire might be equal to about 25% to 30% of each new hire’s annual salary, Payne estimates.
An IMO like Creative One could probably comply with a rule like the DOL fiduciary rule in 21 months, but not in just two months, Payne writes.
2. Keep it simple, and low-tech.
Lance Hunt, an agent with Fort Collins, Colorado-based Financial Integrity Design L.L.C., pleads with regulators to keep any new rules easy to administer.