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DOL Fiduciary Rule

DOL Fiduciary Rule

If you are like me, you are very interested in what our new president will decide to do with the DOL Fiduciary Rule with its first implementation date of April 10, 2017 looming. Given the implications, there are a good number of folks holding their breath in hopes that it will be repealed. For these folks, Trump’s repeal of the DOL Fiduciary Rule will likely turn into a big sigh of relief, but what about everyone else? The work to prepare for and implement the rule’s requirements has been nothing short of daunting. Many agents, agencies, IMOs and carriers started the long and arduous process to be ready many months ago, and this puts them in a good position should the rule survive, but what if it doesn’t? What, if any, benefits result from the progress they have made? 

Registered Investment Advisors and Investment Advisor Representatives (“advisors”) have always been subject to fiduciary standards. Some would be happy to go back to arguing they are “better” and should have a competitive advantage with consumers over insurance-only agents who are not now, and if the rule is repealed, would not become subject to those standards. (http://www.marketwatch.com/story/what-if-trump-kills-the-fiduciary-rule-2017-01-23). Advisors argue that the fiduciary standard is much different from the suitability standards that apply to the sale of insurance products no matter who sells them. 

The DOL rule hasn’t become dinner conversation beyond our industry. Nonetheless, if it is repealed, the issues and perceptions that led to its adoption and to including insurance products will not go away. There is a clear perception that those who sell insurance products and are not now subject to fiduciary standards act in their own interest rather than the interests of their clients. So it seems quite possible that the DOL rule, repealed or not, will become the catalyst for change within our industry. 

So, what happens next? We are not convinced that our industry can stop preparing for the DOL. We think it is likely that even if it does not become effective as it currently exists, changes will come that will change the standard of care owed to consumers, perhaps at the federal level and perhaps at the state level. 

We recommend continuing to prepare for compliance and our clients are choosing that path – at least for now. Regardless of what will flow from the president’s executive actions, we continue to help our clients navigate reviewing their advertising materials, agent agreements, and incentive offerings. In addition, on-site, online, or remote training is recommended for your home office and field personnel. We have found in-person training to be the most effective as it can be developed with your specific organizational needs in mind. Policies and procedures reflecting impartial conduct standards of care are in place for many companies, but not across the board. We would be happy to help you look at what you have done, what might still need to be done, and what a repeal might look like for your organization. 

This is a time of great change and it can be overwhelming, but one thing we can do is focus on strong relationships with consumers and making sure that no matter what happens with the specifics of this DOL rule, our products are sold in a way that is respectful and takes into consideration the best interests of consumers.