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[Guidance Overview] DOL Rules Target Fiduciary Conflict of Interests
"While the rules discourage abusive activities by avaricious salespeople, they also preclude some appropriate practices and may drive honest advisers out of the market.... [T]he reach of the rule is not limited to investment advisers, plan participants and IRA owners. The rule also may affect plan sponsors and other plan fiduciaries." (Snell & Wilmer)
[Guidance Overview] IRS Issues Final Regs on Allocation of After-Tax Amounts from Roth Accounts
"If disbursements are made from a taxpayer's designated Roth account to the taxpayer and also to the taxpayer's Roth IRA or designated Roth account in a direct rollover, then pre-tax amounts will be allocated first to the direct rollover, rather than being allocated pro rata to each destination. A taxpayer will be able to direct the allocation of pre-tax and after-tax amounts that are included in disbursements from a designated Roth account that are directly rolled over to multiple destinations[.]" (Practical Law Company)
For IRA Investors, a Warning on DOL Fiduciary Rule
"[T]he DOL's 'best interest' rule does indeed represent a substantial 'watering down' of the ERISA standard that covers advice on pension assets, such as 401(k)s, but now doesn't apply to rollovers into IRAs. While the DOL initially sought to close this legal 'loophole,' in the department's willingness to compromise with the securities industry, it has shifted from a strict rules-based approach, with essentially 'no tolerance' for financial conflicts of interest, to a much more lenient 'justify your actions' standard." (ThinkAdvisor)
[Guidance Overview] Simplified 401(k) Roth Rollover Rules Finalized
"The Proposed Rules were just finalized and are effective for distributions on and after January 1, 2016. The final rules do not change the tax treatment of rollovers that were made between September 18, 2014 and January 1, 2016 or the notices provided with respect to those distributions. In fact, the revised notices will be able to continue to be used under the final rules because the proposed changes were adopted substantially without any changes other than clarifying changes." (Winstead PC)
Q&A on the DOL's Fiduciary Rule: Is This Covered?
"HSAs are covered under the new Rule. Are Coverdell IRAs also covered? ... If the SEC comes out with a uniform fiduciary standard, will it trump the DOL ruling? What is the future for taxable accounts and fiduciary advice? ... Will a bank teller's referral of a client to an advisor, and receiving a bonus for doing so, be considered a fiduciary act? ... Under the rule will all retirement investment advisors be ERISA 3(21) fiduciaries with some operating under the BIC exemption?" (fi360)
'Best Interest,' BICE and Class Action Targets, Part 2
"Unless Financial Institutions and their Advisers understand and successfully adapt to the shift from a culture of 'suitability' to the more demanding 'fiduciary/"best interest"/prudence' culture required under the DOL's new fiduciary rule and BICE, the likelihood of successful class actions against them will definitely increase.... [This article addresses] the issue of 401(k) Rollovers and IRAs, variable annuities and equity/fixed index annuities." (The Prudent Investment Adviser Rules)
[Guidance Overview] The DOL's 2016 Final Fiduciary and Conflict of Interest Rule: Why Challenges to the DOL's Authority to Regulate the IRS Will Fail
"Has the [DOL] exceeded its authority by regulating rollovers to, and investments in, [IRAs] and other tax-favored accounts under the Internal Revenue Code that are not subject to regulation under [ERISA]? ... [S]ome commentators expect the financial services industry to seek to overturn these rules in the courts ... Should such a challenge materialize, however, [the authors] are of the view that it would fail -- at least to the extent that the challenge is based on the lack of authority on the part of the [DOL] to regulate IRAs." (Mintz Levin)
'Best Interest,' BICE and Class Action Targets
"[T]here are six areas that will face the most scrutiny and potential class action litigation under the DOL's new fiduciary rule and BICE: [1] Actively managed mutual funds; [2] Closet index funds; [3] Brokerage 'preferred provider' programs; [4] 401(k) rollovers and IRAs accounts; [5] Variable annuities; [5] Equity indexed annuities." (The Prudent Investment Adviser Rules)
[Official Guidance] Text of IRS Final Regs: Removal of Allocation Rule for Disbursements from Designated Roth Accounts to Multiple Destinations
8 pages. "This document contains final regulations eliminating the requirement that each disbursement from a designated Roth account that is directly rolled over to an eligible retirement plan be treated as a separate distribution from any amount paid directly to the employee and therefore separately subject to the rule in section 72(e)(2) ... allocating pretax and after-tax amounts to each distribution. As a result of this change, if disbursements are made from a taxpayer's designated Roth account to the taxpayer and also to the taxpayer's Roth IRA or designated Roth account in a direct rollover, then pretax amounts will be allocated first to the direct rollover, rather than being allocated pro rata to each destination. Also, a taxpayer will be able to direct the allocation of pretax and after-tax amounts that are included in disbursements from a designated Roth account that are directly rolled over to multiple destinations, applying the same allocation rules to distributions from designated Roth accounts that apply to distributions from other types of accounts." (Internal Revenue Service [IRS])
[Guidance Overview] More DOL Final Fiduciary Rule Fallout: Some Potential IRS Pitfalls for IRA Custodians and Trustees
"For IRA custodians and trustees using prototype custodial or trust agreements that have been submitted and approved by the IRS, ... any changes made to prototype agreements are submitted to the IRS for approval ... [B]ecause the prototype IRA custodial and trust agreements have generally not been required to be updated for changes in the law since 2002, the IRS may require any prototypes submitted that have not been updated to be updated for law changes before approval." (Morgan Lewis)
Retirement Funds and Business Start-Ups: Do 'ROBS' Work?
"The IRS zeros in on two primary concerns ... [1] [If] the ROBS 401(k) plan is set up in a way that permits only the business owner to invest his 401(k) plan account in company stock, it may discriminate against any rank and file employees who qualify to participate in the plan.... [2] [T]he new 401(k) plan is prohibited by law from paying more for the shell corporation's stock than the fair value of its business. Is a start-up franchise business, for example, really equal in initial value to the amount of its substantial up front franchise fee and other start-up costs -- before it has generated even one dollar of revenue? Questionable, and remember it's your burden to establish that value in the unfortunate event the IRS comes calling." (Golan & Christie LLP)
The Final Fiduciary Rule: How the Labor Department Brought the Internal Revenue Service Wolf to the RIA Door
"If the DOL writes a rule, is it really a regulation at all if nobody is there to enforce it other than a bunch of freelancing tort lawyers? It's a metaphysical and legal questions that hangs over the [DOL's] imposition of fiduciary responsibility over IRA assets where it has no jurisdiction to mete out justice against financial advisors who put their own interests ahead of clients. It's the [IRS] that oversees Individual Retirement Accounts. So what gives?" (RIABiz)
How Many IRAs Should You Have?
"If you have a Roth IRA and a traditional IRA, they obviously must be in separate accounts. If you own an IRA you established for yourself and an inherited IRA, those cannot be combined. In fact, you cannot combine an IRA you inherited from one decedent with an IRA you inherited from another decedent. If you have a business that contributes to a SEP-IRA, the SEP-IRA must be separate from your other traditional IRAs.... There are three reasons offered for keeping your rollover IRAs 'pure' and uncontaminated by 'regular' contributions -- but only one of those reasons is valid! ... There is an unlimited bankruptcy exemption for (noninherited) rollover IRAs. The exemption for 'contributory' IRAs is very generous but not unlimited." (Natalie Choate, in Morningstar Advisor)
[Guidance Overview] The DOL's 2016 Final Fiduciary and Conflict of Interest Regs: The New Fiduciary Standard
"In a welcome and much needed clarification, the Department also said that a consultant or advisor does not become a fiduciary by advertising investment advice or investment management services or by responding to an RFP.... [An] adviser can recommend that a retirement investor enter into an advisory relationship with the adviser without acting as a fiduciary. When the adviser recommends that the investor pull money out of a plan or invest in a particular fund, however, that advice is given in a fiduciary capacity even if it is part of a marketing pitch or RFP." (Mintz Levin)
[Guidance Overview] Final Fiduciary Rule Creates Implications for Plan Sponsors and Financial Advisers
"The final rule could threaten common arrangements that financial advisers have with ERISA-covered plans and IRAs under ERISA's fiduciary duty rules or under related prohibited transaction rules.... The BICE is available to both plans and IRAs and provides needed relief from the ... prohibited transaction provisions in ERISA that would otherwise apply if a participant is deemed to be a fiduciary." (Porter Wright Morris & Arthur LLP)
[Guidance Overview] The DOL's New Fiduciary Rule: The Thin Line Between Education and Advice (PDF)
"The line between investment education and investment advice will pose special challenges for broker and plan-specific call centers, where call center personnel have been specifically trained to know the details of a plan's investment options and the products and services available by the provider. This may result in separate call centers dedicated to IRA customers that provide less information about investment options than to retail customers generally." (Shearman & Sterling LLP)
[Guidance Overview] SEC Extends Rule 482 Relief to Non-ERISA Retirement Plans
"[T]he SEC staff issued a no-action letter in late 2011 under which it agreed, for ERISA plans, to treat the DOL-required disclosures as if they satisfied the conditions of Rule 482. The SEC staff's February 18 letter extends that position to cover provision of the same disclosures required by the DOL rule to participants and beneficiaries in plans that are not subject to ERISA, thus permitting reliance on Rule 482 for such disclosures." (Carlton Fields)
Q&A on the DOL's Fiduciary Rule: BICE & PTEs
"[If] a new person is enrolled in an existing SIMPLE IRA or 403b after the rule is implemented, is BICE required for the new person that comes into the plan? ... With respect to the contract requirements for IRAs and non-ERISA plans under BICE, what content requirements are there? Or, are we creating the content of the contract as we go along? ... If specific funds are being used within the core menu of investment options available, will this be deemed education? ... For the sellers carve-out, is providing a disclaimer in marketing materials and/or account opening documents that the firm is not a fiduciary sufficient? ... How does BICE dovetail -- or not -- with the eligible investment advice provisions of the Pension Protection Act of 2006?" (fi360)
[Opinion] The DOL's Fiduciary Rule: Better Late Than Never
"This change clearly is a victory for investors. Roughly half of retail U.S. mutual fund assets will be protected by the new, higher standards. They will not prevent bad advice, of course, nor trades from lower- to higher-cost funds. But they do command that all advice, whether successful or not, be offered in good faith, and that the rationale for all trades, whether into cheaper or pricier funds, be recorded. Such precautions will inevitably lead to better overall outcomes.... What is less clear is that it is also a victory for financial advisors." (Morningstar)
[Guidance Overview] The DOL's New Fiduciary Rule: The Details on Disclosure (PDF)
"[T]he final [DOL] fiduciary rule provides for two new prohibited transaction exemptions ... Financial institutions seeking to rely on these exemptions must make detailed disclosures to their retail clients, the [DOL] and the general public.... [A 5-page chart] describes the different disclosure requirements applicable under each of the BIC Exemption and the PT Exemption." (Shearman & Sterling LLP)
Independent Agents to Suffer Under DOL Rule
"A significant population of insurance agents are not affiliated with a financial institution 'and these independent agencies are seemingly disenfranchised by the rule, absent some future relief from the DOL,' [Alain Karaoglan, of Voya Financial] said. He also said that 60 percent of Voya's sales are conducted through financial institutions and 85 percent of sales are conducted through registered representatives. Those distributors, if they need to affiliate with a financial institution, 'will be able to do so.' Under the new rule, the insurance company or the broker/dealer, not the individual agent, bears the responsibility for assuring fiduciary conduct." (
[Guidance Overview] The Final Fiduciary Rule: A Plan Sponsor's Perspective (PDF)
"The Fiduciary Rule largely allows employers to continue to provide plan information and educational materials to participants without taking on additional fiduciary responsibility.... Plan sponsors should expect to see material changes to both the procurement process (e.g., RFPs) and their ongoing relationship with service providers." (Groom Law Group)
[Guidance Overview] DOL's Fiduciary Rule Means Financial Advisers Must Consider Changes to Business Models
11 pages. "Financial services companies will need to reassess practices that historically would not have created a fiduciary relationship, and determine the impact on their business models.... [T]his reassessment will need to include everything from what is commonly considered the provision of investment advice, to the marketing and educational materials, and even call center protocols.... [T]he compliance cost will drive many retirement accounts that previously were serviced under a commission structure into a fee-based advisory account structure." (Latham & Watkins)
[Guidance Overview] Traditional and Roth IRAs: A Primer (PDF)
21 pages. "This report explains the eligibility requirements, contribution limits, tax deductibility of contributions, rules for withdrawing funds from the accounts, and provides data on the account holdings. It also describes the Saver's Credit and provisions enacted after the Gulf of Mexico hurricanes in 2005 and the Midwestern storms in 2008 to exempt distributions to those affected by the disasters from the 10% early withdrawal penalty." [Report No. RL34397, dated Apr. 27, 2016.] (Congressional Research Service [CRS])
The Fiduciary Rule Odyssey: Phyllis Borzi at the Helm
"Standing at the center of that narrative is a woman with a hard-shell concept of right and wrong and who was beat back by those who didn't see the black-and-white nature of her ideal. After patching up the battle scars from an early defeat, she regrouped with a powerful duo and conceded to the reality of gray, in one last drive to change the financial advice business forever." (InvestmentNews)
First Quarter Retirement Savings Analysis: Account Balances Lower, Long-Term Savers See An Increase
"The average 401(k) balance dipped slightly at the end of Q1 and is down roughly five percent from the record high balance at the end of Q1 2015. The average IRA balance also decreased at the end of Q1, and is also down five percent from one year ago.... The average balance for people who have been in their 401(k) continuously for 10 years increased 2 percent year-over-year to $240,700. For long-term savers between the ages of 35-39 -- when, according to Fidelity, individuals should aim to have saved between two to three times their salary in retirement savings -- the average balance was $131,000 at the end of Q1." (Fidelity)
There's Rare Good News on the Retirement Front
"A record 13.6 percent of 401(k) participants raised their savings rate during the first quarter this year. Overall, employee contributions, combined with employer matching funds and profit sharing, rose 12.7 percent to reach another record. Not only are savings rates up, but more people are saving in both a 401(k) and an Individual Retirement Account ... Fidelity's universe of double-barreled savers is up 7 percent from a year ago, to 1.3 million people, with an average contribution of $11,600, up $300." (Bloomberg)
House Passes Resolution to Block DOL Fiduciary Rule
"H.J. Res. 88, which passed the House by a vote of 234 to 183, will... [1] Protect access to affordable retirement advice for all Americans. [2] Ensure small business owners can continue to find the advice they need to help their employees plan for retirement. [3] Build upon a larger, bipartisan effort to strengthen protections and help all Americans retire with the financial security and peace of mind they deserve." [Editor's note: the President has stated he will veto the resolution if is presented to him (i.e., if it is approved by the Senate).] (Committee on Education and the Workforce, U.S. House of Representatives)
Fiduciary Enforcement: How Advisers Can Avoid Legal Trouble (Part 2)
"The DOL retains the right to evaluate an institution's policies and procedures, and has vowed that it will be 'closely monitoring' institutions as they roll out new policies and procedures in the coming year.... [T]he agency can potentially declare that the institution has failed to meet the best interest contract requirements -- which would render the firm ineligible for the necessary prohibited transaction exemption, causing all of its advisors and conflicted compensation to be in violation of the rules, a potentially catastrophic outcome that institutions will desperately wish to avoid." (Michael Kitces, in Financial Planning)
The DOL Fiduciary Rule: How Advisors Can Comply and Thrive (Part 1)
"In essence, financial services product companies claimed that they can offer often illiquid and opaque, commission-based and sometimes even proprietary products to consumers, while also receiving revenue-sharing agreements, and still act simultaneously in a client's best interests as a fiduciary ... [W]hile the fiduciary rule didn't outright regulate what the financial industry can and cannot do, it did change the legal standard by which the industry's actions will be judged, and ensure that eventually the courts will have the opportunity to rule on these fiduciary conflicts. And in the long run, that will be a world of difference." (Michael Kitces, in Financial Planning)
[Guidance Overview] DOL New Fiduciary Regulation: Action Items for the Next Year
"Understand that this rule is directed at investment advice, and is not confined to defined contribution plans -- HSAs with investment components are subject to this rule ... Review any agreements or correspondence from service providers... and note where changes may be forthcoming from the providers, including potentially higher fees ... Review any communications to plan participants regarding rollovers and distributions to ensure that no particular recommendations are inadvertently being made ... Review who the employees are (and how they are compensated) who regularly communicate with plan participants and beneficiaries, and educate them about the new rule's requirements." (Findley Davies)
The IRS Attack on Illiquid IRAs
" 'The IRS has long believed that there is substantial noncompliance with minimum distribution requirements,' says Natalie Choate, an attorney with the Boston law firm Nutter McClennen & Fish.... Choate points to two windows: Form 5498, filed annually with information on how much an IRA account is valued and whether a distribution is required, and Form 1099-R, which reports the amount of any distribution. Starting with the 2015 versions of these forms, due in the first half of 2016, IRA custodians must reveal the presence of hard-to-value assets, and the asset type.... The new information from the forms can show the agency which large IRAs with illiquid assets are in the RMD stage." (Financial Planning)
[Guidance Overview] The DOL's New Fiduciary Rules for Retirement Investment Advice
"In applying the new fiduciary definition, a critical threshold question is whether a communication is a 'recommendation.' Borrowing from FINRA's definition, the final regulation defines 'recommendation' as 'a communication that, based on its content, context and presentation, would reasonably be viewed as a suggestion that the advice recipient engage in or refrain from taking a particular course of action.' The DOL also borrowed from select SEC and FINRA interpretations about recommendations regarding the degree of individually tailored communications, lists of securities, aggregating communications, and disregarding whether the source is a person or a computer." (Faegre Baker Daniels LLP)
[Guidance Overview] The DOL's Final 'Fiduciary' Rule -- Countdown to Implementation Begins in Earnest
"In general, the structure of the Final Rule gives fund sponsors more basis for contending that their sales activities should not be treated as a 'recommendation' ... The Preamble indicated that the DOL did not intend to depart from a 'plain and natural reading' of the term 'investment advice' in the statutory text of ERISA.... The DOL also stated (in the Preamble only) that a communication must involve a 'call to action' in order to rise to the level of a recommendation.... By removing the 'asset list' in the BIC Exemption, the scope of the exemption expands significantly, and comes closer to becoming the 'principles-based' approach intended by the DOL." (Jones Day)
[Opinion] ICI Urges Congress to Reject DOL Fiduciary Rule
"While the Department's final rule reflects a number of modifications, the basic structure of the proposed rule remains intact. Like the proposed rule, the final rule imposes significant new liability through a complicated, back-door regulatory regime that will have the effect of limiting available advice options for many savers. As a result, implementation of the rule will make it more difficult for low- and middle-income Americans to save for retirement. Small businesses, in particular, will find it more difficult to offer their employees saving opportunities." (Investment Company Institute [ICI])
Even 'Softer' Fiduciary Rule Will Challenge Providers
"One veteran retirement plan adviser predicts the real impact of the new DOL fiduciary rule will take shape over the long-term -- and firms' initial attempts at compliance may not represent their final approach." (PLANSPONSOR)
The Impact of 'Next Generation' IRAs: myRA Accounts, EZ IRA and State-Mandated IRAs (PDF)
"Given the critical role that IRAs have in wealth management and retirement planning, it is important for employers as well as retirement and payroll service providers to educate themselves on these next-generation IRAs. With a more complete understanding of these new types of payroll IRA programs, employers will be able to make informed decisions when selecting an appropriate retirement savings vehicle for their employees, and providers will be able to offer up-to-date guidance to them." (The Wagner Law Group)
[Guidance Overview] Q&As on DOL Fiduciary Rule: Rollovers and IRAs
"Would the definition of 'investment advice' include a rollover from previous 401(k) to current 401(k)? ... How can a level fee plan fiduciary advisor accept a participant's rollover and manage the IRA rollover assets with a level fee? ... Will rollover analysis be required for any IRA rollover advice? ... Because BICE is not available to advisors with discretion does that mean that advisors who are fiduciaries on a retirement plan cannot recommend a rollover to an IRA and use BICE to avoid the prohibited transaction issue due to uneven compensation?" (fi360)
Three Five-Year Rules for Roth IRAs You Need to Know
"[1] Five-year rule for penalty-free distributions of converted funds ... [2] Five-year rule for tax-free distributions of earnings ... [3] Five-year rule for beneficiaries." (Slott Report)
Protecting Access to Affordable Retirement Advice
"To protect access to affordable retirement advice, Rep. Phil Roe (R-TN), along with Reps. Charles Boustany (R-LA) and Ann Wagner (R-MO), introduced H. J. Res. 88. The resolution would invoke Congress's powers under the Congressional Review Act to prevent the department's rule restricting access to retirement advice from going into effect." (Committee on Education and the Workforce, U.S. House of Representatives)
Dear Agents: This is Your Life Under 'Best Interest'
"Performance incentives, bonuses, contests, special awards, trips, appraisals and sales quotas -- favorite levers of insurance companies to spur their armies of distributors are going to change ... Who decides what programs to keep, what to drop and how incentive programs change? The insurance carriers and broker-dealers themselves and there's going to be a lot of pressure on broker-dealers to re-evaluate compensation practices." (
[Guidance Overview] A Plan Sponsor Overview of the Fiduciary/Conflict of Interest Rule (PDF)
"The final rule is not applicable until 2017, and a new presidential administration or courts could modify the final rule before it goes into effect. In the meantime, however, in response to the final rule, it may make sense for plan sponsors to review their investment education material. Investment fiduciaries' attendance at fiduciary training with a focus on selection and monitoring duties could also be helpful as the rule's impact becomes more clear under various factual scenarios." (Xerox HR Services)
[Guidance Overview] The DOL's Finalized Fiduciary Rule: What You Need to Know
"The DOL's ultimate goal is to impose a universal 'Best Interest' fiduciary standard on all types of advisers to plan sponsors, participants and IRA owners.... Plan sponsors now must understand how their providers are affected by the new rules, lest their compensation be a prohibited transaction for which the plan sponsor could be jointly liable.... [Plan] sponsors should be prepared for the likelihood that vendors will present them with new or modified documentation, as the vendors seek to qualify under one of the now finalized regulatory regime's exceptions or exemptions or to clarify their fiduciary status. Sponsors should be aware that such changes could take the form of a negative consent requiring no affirmative action by the sponsor." (The Wagner Law Group)
[Guidance Overview] Education or Advice: The DOL Final Definition of Fiduciary; Conflict of Interest Rule
"A notable difference between the Final Rule and the 2015 revised proposal is that the Final Rule does not consider appraisals, fairness opinions, or similar statements concerning the value of securities or other property to constitute investment advice. All appraisals and valuations, not just those for ESOPs, are excluded from the rule.... Since the Final Rule requires that an independent fiduciary have oversight of the specific designated investment alternatives, this exception does not apply to any presentations of asset allocation models or interactive investment materials to IRA owners. Presentations to IRA owners may not include specific alternatives without being considered investment advice." (Benefits Bryan Cave)
Potential Challenges to the DOL's Conflicted Advice Rule? (PDF)
"Some have expressed concern that the DOL went too far and 'caved' to the pressure of opponents. The fact that both proponents and opponents of the guidance have some issues with the final product is an indication that the DOL may have found some common ground.... Preventing the implementation of the rule at this stage of the process has little precedent." (Ascensus)
House Committee Approves Resolution to Stop Fiduciary Rule, Protect Access to Affordable Retirement Advice
"The House Education and the Workforce Committee, chaired by Rep. John Kline (R-MN), today approved a resolution (H.J. Res. 88) to block the [DOL]'s 'fiduciary' rule and protect access to affordable retirement advice for low- and middle-income families.... Led by Rep. Roe, lawmakers advanced complementary bipartisan proposals that would require financial advisors to act in the best interests of their clients, and ensure low- and middle-income Americans have access to quality, affordable retirement advice. The House has also taken action on legislation sponsored by Rep. Wagner that would have required the department to coordinate its actions with the [SEC]." (Committee on Education and the Workforce, U.S. House of Representatives)
[Guidance Overview] The New Fiduciary Rules: What Do You Need to Know and Do Now? (PPT)
51 presentation slides in PowerPoint format. Topics: [1] Rollout of new rule; [2] New fiduciary advice definition; [3] Exclusions from fiduciary advice definition; [4] BIC exemption; [5] PTE 84-24; [6] Fee levelization; [7] Robo-advice; [8] Rollovers; [9] Managed accounts; and [10] Practical considerations. (The Wagner Law Group)
[Opinion] Why Luring 401(k) Assets to IRA Rollovers in a Post-DOL-Rule World Remains Child's Play, Which Keeps $7.6 Trillion in the IRA Game and Growing
"Assets will flow unimpeded to IRAs from 401(k) plans for two very different kinds of reasons, says Bing Waldert, managing director of Cerulli.... [T]he final DOL rule was watered down over the course of its protracted comment period to make it possible for a broker to have a client sign away protections by means of an exemption to the best interest contract. In other words, brokers are accustomed to saying: 'If you don't mind initialing this: It just says we're doing the best we can for you. I have a better pen if you need one.' ... Investors are unlikely to register that change amid the barrage of paper they are wading through[.]" (RIABiz)
[Guidance Overview] What Advisors Need to Know About the New Fiduciary Rule
"For years, the [DOL] issued exemptions that were extraordinarily narrow in scope and very much transaction-based. In a complete reversal, however, on the same day as it unveiled its new Fiduciary Rule, the DOL also unveiled a 300+ page document that introduced a new, broad, principal-based prohibited transaction exemption, known as the Best Interest Contract Exemption [BICE].... [T]he BICE was intentionally created to be extremely broad and covers just about all the current standard compensation models and industry practices." (Slott Report)
Service Providers Express Tremendous Uncertainty About Changes Required to Meet New Fiduciary Regulation (PDF)
"4% of the firms indicated that they would become a fiduciary for the first time under the new regulations, while 23% would continue to be a fiduciary, and 30% said they planned to continue under a non-fiduciary status. However, 34% of firms indicated that they are unsure which direction to take.... 60% indicated that key parts of the regulation are still not clear. 75% are watching to see how their peers are interpreting and addressing the regulation. 49% are looking for guidance from industry organizations." (The SPARK Institute)
[Opinion] Assessing the Final DOL Fiduciary Rule
"[M]any of the critical fixes to the Fiduciary Rule called for by the U.S. Chamber of Commerce remain unaddressed or were made worse in the final rule. These include important issues such as whether the final rule discriminates against small businesses, limits the availability of investment education, substantially increases litigation risk to the detriment of savers and the retirement system, and gives insufficient time to implement the final rule." (U.S. Chamber of Commerce)
DOL Accused of 'Legislation by Rulemaking' on Fiduciary Rule
"Congress 'did not intend' for DOL 'to become a primary regulator of the conduct and compensation of financial advisors to individual retirement accounts,' [former EBSA Secretary Brad Campbell] said, nor did Congress intend for the 'unique fiduciary standard of care applicable to employee benefit plans under ERISA to apply to IRAs.' " (ThinkAdvisor)
CBO Cost Estimate for H.R. 4294, Strengthening Access to Valuable Education and Retirement Support Act of 2015 (PDF)
"H.R. 4294, the Strengthening Access to Valuable Education and Retirement Support Act of 2015, would amend the section of the Internal Revenue Code that prohibits self-dealing transactions by fiduciaries of certain tax-favored plans, including employer-sponsored retirement plans, individual retirement accounts, and health savings accounts. The bill would add a definition of investment advice ... [and] a new statutory exemption related to investment advice that a fiduciary can provide to those tax-favored plans, plan participants, or beneficiaries.... H.R. 4294 would change requirements regarding disclosure of potential compensation accruing to the fiduciary or an affiliate.... The staff of the Joint Committee on Taxation (JCT) estimates that the bill would have a negligible effect on revenues over the 2016-2026 period. Enacting the bill would not affect direct spending." (Congressional Budget Office [CBO])
CBO Cost Estimate for H.R. 4293, Affordable Retirement Advice Protection Act (PDF)
"H.R. 4293, the Affordable Retirement Advice Protection Act, would amend portions of [ERISA] that prohibit self-dealing transactions by fiduciaries of employer-sponsored retirement plans. The bill would add a definition of investment advice... [and] a new statutory exemption related to investment advice that a fiduciary can provide to those plans, plan participants, or beneficiaries.... H.R. 4293 would change requirements regarding disclosure of potential compensation accruing to the fiduciary or an affiliate.... CBO and the staff of the Joint Committee on Taxation (JCT) estimate that the bill would have a negligible effect on revenues over the 2017-2026 period. Enacting the bill would not affect direct spending." (Congressional Budget Office [CBO])
[Opinion] A Case for Suing the DOL Over Its Fiduciary Rule
"[In] creating the Fiduciary Rule, the [DOL] never analyzed the impact on the fixed annuity marketplace, including the fixed indexed annuity marketplace. Also, by their own admission, in the flawed impact analysis they did conduct, they did only a cursory review of variable annuities ... As a result, they failed in their primary duty to Congress to provide a thorough analysis of both the costs and the benefits the rule will provide in the marketplace(s) it will affect. The department used selective and inconclusive analysis and arrived at their predetermined justification ignoring the multibillion dollar marketplace of IRA annuities." (
[Guidance Overview] DOL Finalizes Fiduciary Definition and Conflict of Interest Rule
"The final rule first describes the kinds of communications or categories of advice that constitute 'investment advice.' It then describes the types of relationships and circumstances that give rise to fiduciary investment advice and thus subject the advice provider to fiduciary standards and certain prohibited transaction rules intended to address conflicts of interest and those types in which they do not. [This article includes] summaries of these two parts of the final rule, along with observations on the differences between the final rule and the proposed rule." (Proskauer Rose LLP)
[Guidance Overview] Employer Action Required Following Issuance of DOL Final Fiduciary Rule
"Employers should ... expect that advisors may want to renegotiate their service arrangements for various reasons, such as: [1] To change the scope of investment advice or education provided to the plan or its participants, [2] To revise compensation arrangements to ensure that no prohibited transaction occurs by virtue of the receipt of such compensation, [3] To provide necessary disclosures or acknowledgments to ensure the arrangement fits within an applicable exception to the final rule, and [4] To incorporate required provisions under the newly issued Best Interest Contract Exemption or other applicable prohibited transaction exemptions and advisory opinions to avoid exposure to possible excise taxes." (Winstead PC)
[Guidance Overview] A Brave New World for Investment Advisors Following Issuance of Final Rule
"As a fiduciary investment advisor to an ERISA-governed plan, the person will become subject to the fiduciary standards of care under ERISA and could be personally liable for losses resulting from the recommendations given to the plan or participants. It is irrelevant whether the plan to which the advice is provided is a participant-directed plan under ERISA Section 404(c). Although fiduciaries are not generally liable under an ERISA 404(c) plan for investment losses that are the direct and necessary result of the participants' directions, that protection does not extend to advice that is provided to the participants imprudently or that implicates a prohibited transaction." (Winstead PC)
House Committee to Mark Up Resolution Blocking Fiduciary Rule, Protecting Access to Affordable Retirement Advice
"On Thursday, April 21 at 9:00 a.m., the Committee on Education and the Workforce, chaired by Rep. John Kline (R-MN), will consider a resolution (H.J. Res. 88) that would block the [DOL]'s controversial 'fiduciary' rule. The resolution was introduced by Rep. Phil Roe (R-TN), chairman of the Subcommittee on Health, Employment, Labor and Pensions, along with Reps. Charles Boustany (R-LA) and Ann Wagner (R-MO)." [Live webcast of the hearing will be available online.] (Committee on Education and the Workforce, U.S. House of Representatives)
[Guidance Overview] The DOL's Final Fiduciary Rule Is Here: a First Look for Plan Sponsors (PDF)
54 presentation slides. Topics: Why the need for a new fiduciary rule? Who is a fiduciary? A review of the 1975 Rule; The rulemaking process and the Proposed Rule; Why plan sponsors should pay attention; Final Rule brings new definition of investment advice; Exceptions; Compensation requirement; Best Interest Contract (BIC) exemption; and Implementation deadlines. (Trucker Huss)

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