Warren Hersch: Everyone has been talking
about the DOL fiduciary rule being too broad
and too unwieldy. Does anyone have a thought
as to if there were one or two changes you feel
would help to streamline the process and make
the rule workable?
Bob Phillips: One of the things that we can look to
for specifics is financial services and insurance laws
that have passed in other countries, particularly
the uK and Australia. They were more interpretive, they were more specific scenarios, and they
were less broad. Then, once everyone agreed to
everything in the uK and Australia, they gave three
years for the company, the agents and everybody
to roll it out and have it completely implemented.
We’ve been given less than a year on something
that, as you said, is broad. It should have been
done better. This seems to be more of a political
rollout with a timeline set on the backend to get it
done by — and get it out — vs. doing what’s best
for the industry, what’s best for the agents, and
what’s best for the clients.
I don’t think there are any quick fixes. I think it
needs to be redone or we’re going to have a revisiting
as we have had in some other areas. It just seems destined to fail at this point, at least in rollout. Whether
it happens and everybody has to adapt, that’s almost,
well I don’t want to say beside the point, but the
most concerning thing is the lack of preparation and
the lack of specifics, as already mentioned.
Chip Anderson: I would like to comment on
what Mr. Phillips said. He is exactly right. This
seems to be a political agenda to get this rule in
place before the current administration leaves
office. And all the things that they’re trying to get
changed in this short period of time is unrealistic.
If you want what’s really best for the client, this is
not the rule for that.
Pam Heinrich: I will add this comment that the
NAFA lawsuit isn’t seeking for the department to
make some fixes or some tweaks to the rule, we’re
asking the court to vacate the rule because it is, as
written, unworkable. I don’t know that we would
venture to outline any small minor assessments; I
think they’d have to go back to the drawing board.
Warren: Would you expect an exodus from the
field, say comparable to what’s taking place in
the UK where I understand some 9,000 agents
and advisors left the field subsequent to the
implementation of what they call their retail
Chip: That’s exactly right. I believe that personally.
Chris Johnson: I absolutely would and I think
there’s a little bit of a backlash from those who
offer the products coming our way as well. You
know a lot of broker dealers today allow their reps
to write fixed indexed annuities off of their grid, or
what they call “outside business activity.”
I think the LBA’s, because of the new oversight
responsibilities of everyone that offers product,
they’re going to have to limit how much product
they offer in order to make sure that they can
police it all properly. I think that overall ability for
registered reps to sell fixed indexed annuities off
the grid is going to change dramatically and that
impacts about how 50 percent of registered reps
sell insurance products, so I think that’s going to
have a big impact.
Warren: Would you expect also, at least for a segment of the advisor community, that more of them
will endeavor to become dually registered or do
you not see that happening?
Chris: I think you’ll see both. You’re going to see
some people go the whole way and get dually
registered. You’re also going to see a lot of people
leave the business as a result of the additional
Pam: Well, I would agree with what both Chip
and Chris have said. I would say that the department really misunderstands the fixed annuity
segment of the industry. The department talks
about the supposed loss of between $33 and $36
billion dollars over 10 years; however, they admit
that that has nothing to do whatsoever with fixed
annuities and is entirely due to mutual funds sales.
They offer no evidence that there is a problem
that needs solving in regard to fixed annuities and
I think we got in with the current a little bit. So
that’s a challenge.
Executive director at nAfA
Senior Vice President, Chief
Marketing officer at national
general legal Counsel
Managing director and
founder of Alternative
financial Advisor, President
and CEo at Compass