The DOL finally released its final version of its UPDATED fiduciary rule (best interest rule).
Quick Summary
1) Insurance agents selling FIAs in IRA rollovers are deemed fiduciaries
2) Suitability as to why an annuity was the best option for a client must be documented
3) Commissions must be disclosed
4) A financial institution must sign off that the sale is suitable
We all knew it was coming but the September 23, 2024, effective date surprised many and will cause many in the insurance industry to scramble to deal with it.
Use a Decision Tree to Decide if You Should Become Series 65 licensed
With the DOL regs looming, I thought it would make sense to remind readers about the decision tree I created to help advisors determine if advisors should get their Series 65 license. To download a decision tree that you can fill out, click on the following:
https://advisorshare.com/decision-tree
Fixed Annuities in the crosshairs!
Under the new rules, insurance agents are now deemed fiduciaries when selling fixed annuities (including FIAs) in an IRA rollover (moving money from a 401(k) to an IRA).
Now insurance agents who avoided getting their Series 65 license so they wouldn’t be regulated are now regulated as a fiduciary as it pertains to IRA rollovers.
Best interest requirements seem daunting
Insurance agents selling annuities in 401(k) rollovers will have to make sure the annuity is the best/most suitable option. That means that the agent will have to document that all available options were also considered and that the annuity was the best option.
Financial Institution Sign-Off
Under the new rules, a Financial Institution must document the reasons for a rollover recommendation and provide that documentation to the Retirement Investor (including a written explanation of the basis for recommending a rollover).
Who is a financial institution? A Broker Dealer, RIA (Registered Investment Advisor), insurance company, and bank.
The word on the street is that insurance companies are NOT going to sign off as the financial institution leaving IMOs (Independent Marketing Organizations) to quickly start their own RIAs or affiliate with an RIA that can sign off on IRA rollover sales.
Compensation changes/disclosures
Insurance agents who are used to qualifying for “free” trips, getting paid part of the override, or being paid a bonus on their annuity business will have to forgo these benefits for IRA rollover sales.
Also, compensation will have to be disclosed to the client.
IMO/RIA Combos
Over the years many IMOs have started RIAs to leverage their relationship with insurance agents who want to get a 65 and start gathering investable dollars.
Unfortunately, most of these RIA platforms are not very good! How do I know this? Because I’ve reviewed, in detail, almost every RIA platform started by an IMO. Even if most are not very good, they are ahead of the game when it comes to helping advisors comply with the new DOL regulations.
Advisor Share IMO—Advisor Share RIA
Many advisors who read my newsletters ask me…what do you do for a living? I like the question because that means I’m not being overly commercial with my weekly “educational” newsletters.
What do I do for a living? Well…I do several different things.
1) I have an educational company (www.wealthpreservationinstitute.net)
2) I am a co-founder of an IMO (www.advisorshare.com)
3) I am a co-founder of an RIA (www.advisorsharewm.com)
4) I own OnPointe Software (OnPointe Risk Analyzer and OnPointe Retirement Planner)
What do I do for a living? I help advisors provide the best advice to their clients. That’s always been my goal since being in the industry for over 25 years.
What can my team do to help advisors with the new DOL rules?
Because we have our own IMO and RIA (one with a very unique AUM offering), we will be able to help insurance agents comply with the new DOL rules.
Whether you work with our IMO/RIA combo or not, NOW IS THE TIME for insurance agents to determine if they should 1) get their 65 license or 2) figure out which IMO/RIA combo they are going to work with to comply with the impending DOL regulations.
Download the Peak Boomers Impact Study
Missed last week’s newsletter? To download this study (with great info), click on the following:
