2011 0301 - DOL - 1210-AB32 - ACLI - Testimony - Hearing on Definition of Fiduciary - Investment Advice - 9p

  • 2011 0301 - DOL - 1210-AB32 - ACLI - Hearing on Definition of Fiduciary - Investment Advice  ---  [BonkNote] ---  9p
  • We share the Department’s interest in seeing that plans and participants who seek out and are promised advice that is impartial ultimately receive advice that adheres to the rigorous standards imposed by ERISA.
    • At the same time, we are concerned that the Proposed Rule’s pursuit of this objective interferes with investment sales and distribution practices that are customary in the marketplace, well understood, and commonly relied upon by financial services providers, plans and participants alike.
  • Parties engaged in transactions with ERISA plans and IRAs need clear, unambiguous rules by which to determine their duties and obligations.
    • Financial institutions such as life insurers and their sales representatives should not be treated as fiduciaries under ERISA when they are engaged in selling activities and are clear that they are acting in a sales capacity.
  • As responsible providers, we have an interest in seeing that our customers are well served, are happy with our products and services, and that our customers find them useful to the attainment of their financial goals.
  • 3 - As we read the proposed regulation, the seller’s limitation applies to IRAs.
    • It is common for advisors and agents to engage customers and prospective customers on their particular goals and objectives to better understand their product and service needs. Based on these conversations, an advisor might explain the pros and cons of various investment vehicles including variable annuities, mutual funds, brokerage accounts, banking products, fixed annuities, alternative investments and several types of advisory accounts. Within each of these types of securities and property, advisors/agents can usually recommend several different specific securities that may have different features. The compensation paid by product and service will vary. For instance, compensation charged for executing a stock trade will differ from compensation received for selling an annuity. The seller’s limitation, with an appropriate indication of the seller’s interest, makes it possible to recommend products and services to customers.
    • [Bonk: No Mention of Life Insurance Policies, IUL's, LIRP's]