Displaying items by tag: fiduciary rule

Monday, 02 March 2020 10:07

Variable Annuities Escape New Regulation


Variable annuities have been going through a difficult period recently. Fixed and fixed index annuities have been grabbing market share in the year since the DOL rule got canceled. However variable annuities just escaped an important new regulation. Massachusetts just implemented the first state fiduciary rule—which may become a template for liberal states all over the country. However, variable annuities have officially been categorized as insurance products, not securities, so do not fall under the purview of the best interest rule.

FINSUM: This is a major development for the variable annuities industry because there were a lot of fears the rule would consider them securities. It seems like the Massachusetts rule will become the standard template for state adoption all over the US, so this is a big victory.

Published in Wealth Management
Wednesday, 26 February 2020 15:51

Assets are Moving into Fixed Annuities and out of VAs

(New York)

A new report shows that fixed index annuities sales have been surging. FIAs saw sales jump 57% in 2019, and there appear to be two reasons why. Firstly, the defeat of the DOL’s fiduciary rule completely reopened the market to a product that had been in serious trouble in the period leading up to the rule. Additionally, due to de-risking, variable annuities have become less attractive, and more money has been moving into fixed index annuities, which also offer higher rates than fixed annuities. Generally speaking, “Broker-dealers have embraced the solution as products become more transparent and consumer-friendly”, says Cerulli Associates.

FINSUM: The whole sales process for FIAs has really cleaned up its act and the marketing materials and structures are more accessible now. We expect this market to keep rising.

Published in Wealth Management


Advisors will have likely noticed that Massachusetts has just introduced a new fiduciary rule. The rule, announced on Friday, makes Massachusetts the first state to adopt a best interest standard since courts struck down the DOL’s fiduciary rule. The rule is under the usual attacks from industry trade groups, but more surprisingly, it is also being attacked by fiduciary rule advocates. Such advocates had initially praised the rule’s first draft, but now say the state made too many changes before implementation. According to the Consumer Federation of America “What’s left is a modest improvement on Regulation Best Interest but not the kind of tough standard needed to protect investors from conflicted advice.”

FINSUM: The changes to the rule were significant, such as not applying to insurance product sales and not applying to brokers unless “account monitoring” was specifically specified in the customer contract. The rule takes effect March 6th.

Published in Wealth Management
Thursday, 20 February 2020 10:36

DOL Rule 1.0 Might be Coming Back


The terrible, no-good, hated first version of the DOL Rule could be on its way back. While most advisors are aware that many of the Democratic candidates want to bring back the old version of the rule, one big surprise came out this week—even Mike Bloomberg explicitly says he wants the rule reinstated. That comes as a bit of a shock because he is seen as the most moderate candidate (he was a Republican while mayor of NYC!).

FINSUM: There is a huge amount on the line for the wealth management industry in this upcoming election. Not only will taxes likely change drastically, but the regulatory environment may shift radically.

Published in Wealth Management
Wednesday, 12 February 2020 08:24

The New DOL Fiduciary Rule has a Big Risk for Advisors


Industry lawyers are checking every day, but nothing is happening. Everyone keeps looking at the DOL’s information portal to see if the agency has posted a new version of its Fiduciary Rule. Many thought the rule would be published by the end of the year, but so far nothing. The reason this is important is that the agency is running out of time to get the rule finalized and in place before the election. Rules that get approved immediately before elections are much more likely, and easier, for successors to undue. Therefore, if the rule does not get approved soon (which is near impossible because of the long approval process the White House has once the DOL proposes it), the rule is at risk of a victorious presidential candidate undoing it.

FINSUM: It seems likely this rule won’t get done until right before the election. If Bernie, or really any Democrat, wins it will likely be undone and the path will be paved for a much tougher rule.

Published in Wealth Management
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