By Gissou Gotlieb, Field Suitability Compliance Officer
For those covering the topic of the Department of Labor (DOL) fiduciary rule for reporting purposes, for the people at financial firms responsible for making strategic decisions that will make or break the firm, and for those financial professionals dealing with retirees and their nest eggs, the rule and the roller coaster of developments have been a bear! Of course the rule impacts many others, but trying to stay ahead of or even keeping up with it has been a challenge for sure. While some may think we are in the clear now with the requested delay, I’d like to remind you, we are not.
As of this writing, the “delay” is only a proposal that must be formally approved – again – prior to anyone breathing a sigh of relief. While it may look like a done deal, considering all that has transpired in the last few months, it is not. We have been in similar circumstances with this rule before, where what we thought would happen either did not happen, or did not happen in the way that we thought. In those instances, we were almost certain of a particular outcome… just as we are today…
So while I’m reminding you to not count your chickens before they hatch, I’d like to cover a few things that you, as financial professionals, should be aware of while this continues to play out.
On August 31, the DOL published in the Federal Register a proposal to extend the current transition periods for both the Best Interest Contraction Exemption (BICE) and PTE 84-24 through July 1, 2019, and opened a 15-day public comment period on those proposed changes. That comment period ended September 15, and the DOL is currently reviewing the numerous comment letters received – both in favor and in opposition to the extension of the transition period. After it completes its review, the DOL would then submit a final rule to the Office of Management and Budget (OMB) for its review. Only after the OMB completes its review, would the DOL then be able to finalize the extension by publishing a final rule in the Federal Register. Got it? Good! In other words, we are not done yet.
The exemptions primarily impacting fixed insurance products are BICE and PTE 84-24. While most financial institutions (FIs) currently utilize the BICE for allowing their representatives to receive commissions on products sold with/to qualified funds, PTE 84-24 may be available to some financial professionals affiliated with a FI such as a broker/dealer.
Delay or no delay, we are still subject to the part of the rule that went into effect June 9, 2017, which requires financial professionals giving advice on qualified funds and receiving compensation to act in the best interest of their clients. Depending on the exemption that the producer and transaction qualifies under (BICE or PTE 84-24), certain things need to still happen.
If you are a registered representative or investment advisor representative, please contact your financial institution to understand your obligations and compliance requirements. If you are an independent insurance agent without any FI affiliations, you should be operating under PTE 84-24. This means that while you are acting in the best interest of your client, you have disclosure and reporting requirements.
If you have questions about how your business may be impacted or need access to disclosure forms, please contact our office. We have generic PTE 84-24 disclosure forms as well as forms supplied by various insurance carriers. While there is no requirement to send completed forms to the carriers with whom you do business, there is a requirement that you complete them and discuss them with your clients.
Now is not the time to be out of compliance. Please call us with any questions you might have on this topic and we will do our best to assist you.
Gissou Gotlieb | Field Suitability Compliance Officer
Ann Arbor Annuity Exchange
Ph: 800.321.3924 x134 | Dir: 734.786.6134
Ann Arbor Annuity Exchange and its representatives do not give tax or legal advice. Please consult your tax advisor or attorney.
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