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DOL Fiduciary Rule FHT&T Lake Saint Louis, MO May 11, 2016
Compliance DOL Fiduciary Rule FHT&T Lake Saint Louis, MO May 11, 2016
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DOL Fiduciary Rule Published April 8, 2016
7 documents in total (1,023 pages) Effective date: June 6, 2016 Applicability date: April 10, 2017 Full Implementation: January 1, 2018 Effective date: law of the land Applicability date: compliance with the rule Full implementation: phased implementation of portions of the BIC from April 10, 2017 to January 1, 2018 For Broker/Dealer Use Only
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DOL Fiduciary Rule ERISA Fiduciary: Act impartially
Best interest of the customer Reasonable compensation Eliminate conflicts of interest Discuss fiduciary and how ERISA fiduciary is different from SEC fiduciary. For Broker/Dealer Use Only
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Applicable Registrations
401k Profit Sharing Defined Benefit Simple IRA Roth IRA Coverdell SEP HSA Yet to be determined how traditionally non-ERISA plans will be handles. For Broker/Dealer Use Only
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Investment Advice For a fee or other compensation: Recommendation to
Acquire Hold Dispose of Exchange Compensation means DIRECT (Commissions) or INDIRECT (incentive trips, etc) For Broker/Dealer Use Only
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Investment Advice For a fee or other compensation:
Recommendation regarding: Investment policies or strategies Portfolio composition Selection of investment manager Rollovers, distributions or transfers For Broker/Dealer Use Only
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Grandfathering Accounts/Transactions PRIOR to Applicability Date (4/10/17) Compensation can flow Hold recommendations or Reallocation PIP compensation can flow Existing compensation structures are permitted SO LONG AS no further fiduciary advice is provided with respect to that account (obviously an issue for additional deposits) Sub-Account Reallocations and switches of fund allocations within the same mutual fund family are OK—SO LONG AS no additional or different compensation is received For Broker/Dealer Use Only
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Grandfathering Accounts/Transactions PRIOR to Applicability Date (4/10/17) NO investment advice Including on additional deposits For Broker/Dealer Use Only
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The Good, the Bad and the Ugly
For Broker/Dealer Use Only
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The Ugly: Best Interest Contract Exemption
Allows for commission-based and other un-level compensation. Sounds great! What’s the Catch? Lawsuits Class Action Lawsuits Disclosures For Broker/Dealer Use Only
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The Bad: Increase in compliance burden Increase in potential liability
Documentation of fiduciary care Increase in potential liability Greater than suitability standard What is worth the risk Account minimums For Broker/Dealer Use Only
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The Good: Jeanne Zeonia Susie For Broker/Dealer Use Only
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Level Compensation Fee-based Accounts
New World Order Level Compensation Fee-based Accounts For Broker/Dealer Use Only
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New World Order Annuities Traditional Fixed - no change
Variable Annuities-advisory only (no commission) OR BICE Equity-Indexed Annuities-BICE Only unless industry comes up with fee-based FIA. For Broker/Dealer Use Only
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Questions For Broker/Dealer Use Only
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