The survey results provide insights about advisor preparedness, impact on their IRA rollover practices, and guaranteed lifetime income for their clients

For example, when we asked financial professionals how they think the DOL rule will impact IRA rollovers, 74% said they thought it would have a significant impact. 

Since the completion of the survey, we received confirmation that the DOL rule and the exemptions will be delayed for 60 days, making the new applicability date June 9.

The reason for the 60-day extension is to give the DOL more time to complete the examination mandated by the president and to make a preliminary determination whether significant changes are necessary to the rule and exemptions.

However, regardless of what the outcome is with the DOL Fiduciary Rule, acting in a client’s best interest has always been crucial to building sound advisor-client relationships, especially when recommending IRA rollovers.

Pacific Life provides insightful strategies, tips, and tools to help you satisfy best-interest standards, and we are pleased to share a summary of the survey results below.
 

Advisor Preparedness

More than a quarter (27%) of financial professionals do not feel confident that they will be fully prepared for the DOL Fiduciary Rule when it goes into effect.

More than forty percent (43%) of financial professionals say they have an average to no understanding of a general overview of the DOL Fiduciary Rule.

Just less than a quarter (23%) of financial professionals rarely (or never) document client conversations when making a recommendation to roll assets out of employer-sponsored plans, while 28% said that their knowledge of IRA rollover recommendations and best-interest standards are well understood.

Only 18% of financial professionals felt that their knowledge of the Best Interest Contract (BIC) Exemption is well understood.

Planning Opportunity: Tools to help financial professionals document client conversations and gather pertinent information—including demographics, investment profiles, current plan information, and goals related to distributions—will be key to IRA rollover best practices and adhering to a best-interest standard.

Impact of Rule – IRA Rollovers

Just less than three quarters (74%) of financial professionals at least somewhat agree that the DOL rule will have a significant impact on their practices with regard to recommending IRA rollovers; 33% strongly agree there would be a significant impact.

When asked about the transition from a suitability standard to a fiduciary standard, 85% of financial professionals noted they have at least a good understanding.

Just over forty percent (42%) of financial professionals surveyed always recommend (if appropriate) that a client keep his or her assets in an employer-sponsored plan rather than rolling assets to an IRA.

For financial professionals responding that 81–100% of their clients have assets in an employer-sponsored retirement plan, only 29% of this group always discuss strategies that include guaranteed lifetime income when making a recommendation to roll assets out of the plan.

Planning Opportunity: A financial professional acting in a client’s best interest should discuss lifetime income (e.g., annuity lifetime income options) because pensions are becoming less common and other sources of guaranteed income (e.g., Social Security) are currently in flux.

Guaranteed Lifetime Income

There were three areas that financial professionals thought they are somewhat to not well versed in.

1.     Strategies for creating guaranteed lifetime income (31%)

2.     Strategies for using annuitization (42%)

3.     Qualified longevity annuity contracts (QLACs) (62%)

For financial professionals responding that 41–60% of their business is made up of IRA assets, 60% of this group indicated the need for additional training or education on QLACs.

Of the financial professionals who responded that they never discuss strategies that include guaranteed lifetime income when making recommendations to roll assets out of an employer-sponsored plan, roughly 65% indicated a need for additional training or education regarding strategies for creating guaranteed lifetime income.

Planning Opportunity: Financial professionals have a need for additional training/education on annuitization and QLAC strategies.

Regardless of the outcome of the DOL rule, Pacific Life has provided a new series of educational resources for financial professionals, including a helpful IRA Rollovers Resource Guide that contains information and best-practice ideas to successfully navigate the changes to consider when having rollover discussions.

The guide also contains an IRA Rollover Checklist that can help advisors walk clients through the comprehensive evaluation and documentation needed when evaluating their options. We hope you find this information valuable, and we look forward to helping you Thrive with Pacific Life.

You can also contact the Retirement Strategies Group directly at (800) 722-2333 or send an e-mail to RSG@PacificLife.com