IRI DOL Fiduciary Rule- Introduction Webinar

IRI DOL Fiduciary Rule- Introduction Webinar

Transcript

1. DOL Fiduciary Proposal: Introduction and Overview Jason Berkowitz Vice President and Counsel, Regulatory Affairs November 17, 2015
2. IRI DOL FIDUCIARY RULE IMPLEMENTATION TASK FORCE  Today’s Meeting  DOL’s Fiduciary History and Purpose  Level-Setting for the Operations & Technology Community  Determine What We Know and What We Don’t  Key Terms and Concepts of the Proposed Rule  Key Potential Impacts  Key Dates  Next Steps 4
3. BACKGROUND  2010: DOL Released Original Fiduciary Definition Proposal  2011: DOL Withdrew Rule Proposal  July-December 2014: White House and DOL Meetings  February 2015: White House Meeting with Industry Leaders  February 2015: President Directs DOL to Move Forward  April 2015: DOL Released “Conflict of Interest” Rule Proposal  July 2015: Initial Comment Period Closes  August 2015: DOL Holds Four-Day Public Hearing  September 24: End of Supplemental Comment Period 3
4. IMPORTANT CONCEPTS AND DEFINITIONS OF THE PROPOSED DOL FIDUCIARY RULE Main Rule  Broadens definition of investment advice fiduciary  Provides Carve-Outs  Counterparty Carve-out (aka Seller’s Exception)  Platform Provider Carve-out  Investment Education Carve-out  Employee Carve-out 4
5. IMPORTANT CONCEPTS AND DEFINITIONS OF THE PROPOSED DOL FIDUCIARY RULE Best Interest Contract (BIC) Exemption  Written Contract  Impartial Conduct Standards – Best Interest, Reasonable Compensation  Warranties – Policies and Procedures for Conflicts of Interest  Disclosure Requirements – Annual, Point of Sale, Website  Proprietary or Limited Range of Products 4
6. IMPORTANT CONCEPTS AND DEFINITIONS OF THE PROPOSED DOL FIDUCIARY RULE Changes to Insurance and Annuity Exemption (PTE 84-24)  Elimination of Relief for Sales of Variable Annuities to IRAs  Addition of Best Interest Standard  Retains Reasonable Compensation Rules 4
7. IRI CONCERNS AND SUGGESTED REVISIONS  Variable Annuities Should Be Returned to PTE 84-24  Definition of “Fiduciary” covers many non-fiduciary activities  Carve-outs for education, marketing and sales should be broadened  Should be triggered by individualized “call to action” (FINRA definition)  Best Interest Contract Exemption is Unworkable  Reasonable compensation requirements would effectively prohibit commissions and other differential compensation arrangements  Warranties are unnecessary and should be eliminated  Disclosure requirements should rely on existing disclosure regimes  Regulatory Impact Analysis is Flawed 5
8. UNIFIED INDUSTRY COALITION  Providing Input to DOL and WH National Economic Council  Activating Members of Congress to Influence the Rule  Executing Grassroots Plan  Developing Legislative Alternative 4
9. KEY DATES AND NEXT STEPS  By December: OMB Review Begins  February-March 2016: DOL Publishes Final Rule  October-November 2016: Rule Goes Into Effect / Compliance Required  Another Key Point – December 2015: Government Funding Bill 6
10. CALL TO ACTION  Continued Grassroots Efforts  Continued Congressional Meetings  Call for DOL Fiduciary Task Force Co-Chairs a. Distributor and Insurance Company b. Legal & Compliance and Ops & Tech 7
11. Questions? 8