The typical review process takes up to 90 days. Nevertheless, within 50 days on April 14, 2015, the long awaited "Conflicts of Interest" rule was released. We are now on the clock to provide comments back to the DOL.
As discussed in my prior blog post, The Clock is Ticking…, the DOL is attempting to update sections of Employee Retirement Income Security Act of 1974 (ERISA) that focus on investment advice in order to better align consumer protection with the prevailing retirement plans that are available today, but were either not in existence (e.g., 401(k) plan) or first introduced back in 1974 (e.g., traditional IRA).
The DOL stated that1:
Include new Prohibited Transaction Exemption (PTE) – Best Interest Contract Exemption
This new PTE is looking to allow common forms of existing compensation practices, such as commissions and 12b-1 fees, to resume as long as the following key requirements are met by the company (generally the firm that employs the adviser) and the individual adviser:
Allow for carve-outs – acts specifically identified as not constituting fiduciary advice
There were seven that were identified, and they include:
There are over 700 pages relating to the new proposal. The DOL initially allowed for 75 days for stakeholders to submit comments for review. This has now been extended by an additional 15 days to 90 days.
The Retirement Strategies Group is following this issue closely. If you have any additional questions, please feel free to contact us directly at (800)722-2333, ext. 3939, or e-mail us at RSG@PacificLife.com.
1DOL Conflicts of Interests Fact Sheet, p.2
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