IRA

Got Questions About the DOL Fiduciary Rule? We Might Have Some Answers

December 23, 2016

Read about the DOL's set of FAQs on the fiduciary rule attempting to answer some questions raised since the rule's release.

Towards the end of October, the Department of Labor (DOL) released the first set of FAQs on the DOL's fiduciary rule that attempts to answer some questions raised since the fiduciary rule's release. Now if only someone could do the same for parents that are about to be outnumbered by kids.

My wife and I recently found out that we will be adding a THIRD child to our family (or as I like to put it, we're going from playing "Man-to-Man Defense" to playing "Zone Defense"). Needless to say, we are both feeling a bit overwhelmed with the prospects of handling this new addition since, if for no other reason, the grown-ups will now be outnumbered by the "ankle-biters" in our own home.

I'm sure we're not alone when we wish there was some kind of guidance published out there that outlines what to do under these circumstances.

We are almost near the end of December but have not seen any new FAQs; but the DOL did suggest more to come. Luckily, for financial advisors and their firms that are similarly overwhelmed with the prospects of complying with the DOL's fiduciary rules, there is such guidance. On October 27th, the DOL released the first set of FAQs related to the fiduciary rules, and it is expected that the DOL will issue additional sets of FAQs relatively soon.

I won't go into much detail about the actual FAQ and its contents, but below is a list of the areas addressed within this FAQ:

  • Compliance Dates
  • Best Interest Contract Exemption (BICE)- General Questions
  • BICE – Level Fee Fiduciaries
  • BICE – Bank Networking Arrangements
  • BICE and PTE 84-24 – Annuities
  • Disclosures under the BICE
  • Grandfathering in the BICE
  • Principal Transactions Exemption
    • PTE 84-24
  • Complying to the Rule

One thing to note, as an update to one of my prior blog posts, within the FAQ the DOL provided clarity on a few different scenarios under the grandfathering provisions of the fiduciary rule:

  • Grandfathering may apply to systematic purchase programs established prior to April 10, 2017, including advice to continue adherence to the program, but NOT to investment advice to make any changes to the program.
  • Investment advice (and compensation associated with this advice) provided after April 10, 2017 to deposit additional money into an annuity established prior to April 10, 2017 is not eligible for the grandfathering provisions of the fiduciary rule; but the additional deposit does not cause compensation attributable to the annuity purchase that predated April 10, 2017 to become ineligible for the grandfathering provisions. In other words, investments made prior to April 10, 2017 don't seem to be "tainted" (when it comes to the grandfathering provisions) if additional desposits are made.
  • Compensation received as a result of investment advice to sell grandfathered investments is covered under the grandfathering provisions; however, new advice about how the proceeds of the sale should be invested must comply with BICE or other exemptions.

In case you would like some additional information on the DOL's fiduciary rule, we have written several blog posts (please see below) detailing some of the different issues that have been brought up since the fiduciary rule was finalized.

If you have any additional questions, please contact the Retirement Strategies Group at (800)722-2333, ext. 3939, or e-mail us at RSG@PacificLife.com.

 

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Chad is currently a Manager of Regulatory Compliance in the Retirement Solutions Division at Pacific Life. Previously, he was a Senior Retirement Strategies Consultant, bringing more than 13 years of industry experience to his role and providing technical insights to our sales team and registered representatives on a variety of issues including IRAs, qualified plans, annuities, and estate planning issues.

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