There are many things in daily life that are pretty straightforward and self-explanatory. For example, when the traffic signal is green, you go; when your dog runs full speed at you with a ball in his mouth, you play; and when your wife tells you "nothing" is wrong, there most definitely is something wrong (okay, maybe not that last one). Unfortunately, the grandfathering provisions in the Department of Labor (DOL) final fiduciary rule are not so clear-cut, and many of the answers lead to more questions.
In the context of the final fiduciary rule (read our overview), "grandfathering" refers generally to situations in which a financial advisor receives compensation for "pre-fiduciary rule transactions" and continues to receive an ongoing revenue stream for those products after the applicability date of the rule (April 10, 2017), while not having to adhere to a number of the final fiduciary rule's requirements (e.g., contract and disclosure requirements).
The final fiduciary rule describes grandfathering as an "Exemption for Pre-Existing Transactions." Although the original proposed fiduciary rule was not entirely clear about the grandfathering provisions, the final fiduciary rule has shed some light on where grandfathering generally does and does not apply.
Where Grandfathering Does Apply
Where Grandfathering Does NOT Apply
Although the final fiduciary rule provides some clarity about the grandfathering provisions, some of the answers the DOL provided led to even more questions, and might inevitably require guidance by the DOL. Below are some examples.
These are just a few examples of some unanswered questions about the final fiduciary rule, and there are many other questions related to other aspects of the rule. We will continue to keep you posted as updates are provided and answers are found.
If you have any additional questions, please feel free to contact Retirement Strategies Group at (800)722-2333, ext. 3939, or e-mail us at RSG@PacificLife.com.
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