DOL Fiduciary Rule – Upheld for FIAs

Here’s the Skinny,

The 10th District Court of Appeals just upheld the DOL Fiduciary Rule. It was “argued that the DOL rule treated fixed indexed annuities arbitrarily by forcing the products under the best-interest contract exemption, a provision of the regulation that allows brokers to earn variable compensation as long as they sign a legally binding contract to act in the best interests of their clients.”

Currently, Fixed indexed annuities “operate under the same exemption of federal retirement law as fixed annuities. But the DOL put them under the so-called BICE due to their complexity and the potential conflicts of interest associated with their sales.” 

It was also argued that the “DOL violated rule-making procedures and didn’t do a proper economic impact analysis in promulgating the fiduciary rule.”

“The 10th Circuit judges held that DOL followed appropriate administrative procedure, was fair in its treatment of fixed indexed annuities and that it conducted an appropriate economic analysis.”[1]

Oddly, it feels as though the DOL Fiduciary Rule is heating up again given all the recent press and State activities.  If you are not properly adhering to the regulatory constraints of the DOL Fiduciary Rule’s “extended delay” (through July 1, 2019), you are placing yourself in significant jeopardy.

For more information click & refer to these previous Advisor Skinny posts…

That’s the Skinny,

FIA Insurance Companies have begun Auditing for PTE 84-24

Here’s the Skinny,

If you are not operating under BICE, you better have a PTE 843-24 document signed by clients and in your files for all FIA sales!

At least three of the largest FIA Carriers (Fixed Index Annuity Carriers) have announced that beginning January 2018, they will be conducting random audits and/or random app requests in order to verify that agents/advisors are properly disclosing and collecting client signatures on their PTE 84-24 disclosure forms.

The carriers include (but are not limited to):

  • Allianz Life
  • American Equity
  • Athene USA

Last year I wrote in detail regarding the conundrum for advisors between BICE and PTE 84-24.  As I shared at the time, if your BD and/or Corporate RIA do not extend BICE coverage to you (and most do not) on FIA transactions, then you must adhere to PTE 84-24 on all your FIA transactions.

As I stated in that previous Advisor Skinny blog post

“Under the transitional PTE 84-24, the agents/advisors must disclose conflicts of interest plus the sales commission, expressed as a percentage of gross annual premium payments for the first year and for each of the succeeding renewal years, that will be paid to the agent in connection with the purchase of the product. Documentation must be provided to and signed by the client and retained by the agent/advisor for 6 years (meaning written disclosure and client signature is required).”

For additional commentary on this subject, click here and refer to the full Advisor Skinny blog post titled,  “Did You Get Abandoned (to Fend for Yourself) on DOL PTE 84-24?”

Again, if you are not afforded BICE coverage, make sure your files are in order and signatures are being obtained under PTE 84-24.

That’s the Skinny,