Thursday, October 06, 2016

7 Answers About the DOL Rule You Won’t Hear Anywhere Else, From Anyone Else

By Van A. Lumbard, President

We cannot repeat ourselves often enough: DOL preparedness needs to be a priority for all financial services professionals. That time is now, not come April 2017. We encourage you to seek and find those relationships that you can trust to be there for your business going forward and offer you the best-suited resources for your business model. We believe that Ann Arbor Annuity Exchange can be that relationship for you.

AAAE president Van Lumbard tackles seven of the most pressing topics we want you to know about the DOL fiduciary rule, and what we’re focusing on to help ensure your future success.

1.    What are the concerns about the DOL rule that AAAE is hearing from financial professionals?
Our producers, both registered and insurance-only licensed, are concerned about how the new rule will impact the way they do business, what products they can offer, and how they get paid – including how much they get paid. These are important questions, but unfortunately at this time no one seems to have authoritative answers to most of them. We need to understand not only the rule itself, but also how it applies to different products and producers, and most importantly, how each financial institution intends to comply.

Some annuity marketing organizations claim to have the answer for financial professionals, or so it seems. Many producers were getting bombarded by information and “solutions” within days of the final rule’s release. Here we are, more than six months later, and there are still more questions than answers. Without knowing the answers, how can some have viable solutions?

It worries me that producers are making decisions about their future in this business based on potentially wrong or incomplete information. I’m equally troubled that they may be reacting to advice that may not be appropriate for them.

2.    With respect to the DOL ruling, what does AAAE feel are important considerations for financial professionals who sell fixed annuities?
We believe all producers should keep their eyes and ears open to see how the battles around this rule shake out. They should also take stock of their current business: segment their prospects and clients to know their top market, assess their current licenses and registrations to map out any potential additional education that will help them meet their business goals for years to come, and align themselves with entities that are positioned to be a true and long-term resource to them. Our organization is advising preparation now and then action once we know more. Don’t make drastic changes until more is known. With all that is going on, it is best to wait and see how each financial institution decides to comply.

3.    How does AAAE stay on top of regulations that impact our business and the financial professionals we serve?

AAAE is well-connected through our internal staff and partnering financial institutions. We work closely with top fixed and fixed index annuity carriers and have close relationships with numerous independent broker/dealers and registered investment advisors who work with us on regulatory changes. AAAE is a NAFA Premier Partner and NAIFA member. Internally, we have compliance, suitability, and marketing staff who are members of industry associations and active on various committees and working groups in the industry. Our leadership team and employee base are made up of RRs, IARs, and securities principals who are very familiar with the framework and rules of the securities and advisory industries.

4.    What resources will AAAE have to offer financial professionals to help ensure their success in a post-DOL environment?

We are committed to all of our producer segments: insurance-only, RRs, IARs and those with combined registrations (RR/IARs). Our affiliated network of firms has applied for Financial Institution status with the DOL, and if it is granted we feel we will be in a great place to help producers moving forward. Through the more than 30 annuity and life insurance carriers, multiple independent B/Ds, and RIAs that we do business with, we plan to offer a variety of options for doing fixed and fixed index annuity business. This puts us in a great position to help guide our producers in selecting the right solution for their individual business model. In addition, we will continue to provide training, educational resources, business-building tools, and access to vendors who can help align our producers with success. Until then, we will educate our producers on what the upcoming changes may mean to their business – and to them personally – and get them thinking about their future as well.

5.    AAAE has very close relationships with several broker/dealers and RIAs. What have you learned from them that you feel is an asset in how you deal with others?

We work hand-in-hand with our partnering broker/dealers and RIAs. We have a highly efficient and producer-oriented back office. We have taken additional steps to establish processes and procedures around marketing, new business review, and compliance. We understand that a repeatable, documented process is important and oftentimes means the difference between a clean sale and trouble with a regulator.

Our commitment to suitability and compliance review makes our partnering firms feel comfortable that we are not just an organization that is concerned with sales. Because of our experience, we have learned that evaluating the knowledge level of the broker/dealer or RIA is very important when it comes to FIAs. Tailoring our model to suit their compliance, educational, and service needs has been very effective. While the way we do business may be rare for a marketing organization, it is valued by broker/dealers and RIAs.

6.    How can a marketing organization’s foundation of experience be a game changer in the next two years?

Experience and a commitment to executing at a high level will be incredibly important moving forward. Financial institutions will look to work with only the best organizations. Sales volume, while important, will take a secondary role to compliance with the new rule.

No matter what challenges arise, we have long positioned our organization to be responsive. We provide training and education in various forms. We are committed to providing relevant and timely information through our magazine, e-newsletter, website, and mobile app. When you combine our top-notch service model, experienced staff, and compliance-friendly marketing programs with our commitment to do business the right way, we are in an excellent position to continue to help our producers succeed.

7.    What advice does AAAE have for financial professionals to help them thrive through this uncertain period leading up to the April 2017 applicability date of the rule?

The best advice we can offer is to be patient while the industry and financial institutions figure out what is required to comply with the rule. As noted above, if our affiliated firm is granted FI status, we will be in a good position to offer more choices to many of our producers to help align their business with a model that will be designed to address and comply with the requirements of the fiduciary rule in time for the April 2017 implementation.

At this time there are a number of lawsuits filed looking to overturn or alter the new rule. We are supportive of these efforts, and while we hope for a positive outcome, we will continue to make preparations to comply. If those lawsuits fail and the rule is implemented, there will obviously be a number of changes to the way most of us do business.

We advise producers to evaluate their relationships over the coming months and make sure to align themselves with the right organization that has a well-thought-out model to support their sales and move forward regardless of the eventual outcome. We are here to be that resource for financial professionals. We believe those financial professionals who take the time to understand the rule and do things right will be the most successful in the long term. In the meantime, our advice is to continue to serve your clients’ needs.

Please call AAAE to ensure you have access to our resources on this topic:


Van A. Lumbard | President
Ann Arbor Annuity Exchange
Ph: 800.321.3924 x113 | Dir: 734.786.6113

Designed for Financial Professionals.