(Washington)

In what would come as very welcome news for financial advisors, the newest version of the fiduciary rule may have its implementation delayed. The rule was first thrown out by the fifth circuit court a few years ago, then reproposed and accepted in the early part of Biden’s term. Now it is set to go into effect in December. However, a large contingency of trade groups are putting together a formal request to have the DOL delay the full implementation of the rule to give firms more time to get into compliance.

FINSUM: This is potentially good news, but in the longer term it is likely a moot point since it is widely expected that Biden’s DOL will be redrafting an entirely new version of the rule, and probably one that is closely aligned with the original iteration from the Obama era.

(New York)

As inflammatory as it may sound, most of the time media coverage on annuities does not speak the whole truth about why advisors often have a negative opinion of annuities. Of course, there are quite legitimate reasons like higher fees and the possibility of an esoteric product not being a good deal for what a specific retiree actually needs. However, when you get down to it, fee-based advisors have a significant financial incentive to dislike annuities. That incentive? It is that the advisor will not earn fees on the assets in an annuity, which means a client buying one can take recurring revenue out of an advisor’s pocket.

FINSUM: There are legitimate issues with annuities—including bad sales practices in the past—but when you realize this simple fact, it doubly reminds one why brokers sell 99.9% of annuities.

(Washington)

The Department of Labor has just clarified one of the major uncertainties surrounding the current iteration of the fiduciary rule, and the news is not good for advisors. The DOL now clearly states that any invest recommendations that would occur post rollover are directly akin to recommending the rollover itself. NAPA Net summarized the changed, which was clarified by Tim Hauser at the DOL (Deputy Assistant Secretary for National Office Operations at the Department of Labor’s Employee Benefits Security Administration) this way: “Suggesting investments that could occur after a rollover is tantamount to recommending a rollover, and if it meets the rest of the five-part test will constitute fiduciary advice, regardless of how it’s phrased. It doesn’t require the ‘magic words’”.

FINSUM: This is a response to some clever drafting that firms were trying to use to get around the “rollovers are fiduciary advice” mandate. Very important development.