1. DOL Fiduciary Duty and the Important Business Implications
How to do business in an uncertain post Fiduciary Duty world
MLINY

2. Outline The Rule How it Works What’s not under the rule
Getting paid for Fiduciary Advice
The Exemptions, and
The Implications
Best Practices…a start…

3. The Rule
Originally proposed in October as an update to the definition of the term “Fiduciary”
DOL decided not to pursue

4. The Rule
In February 2015 the Executive Branch called publicly for a new proposal
SEC and FINRA opted to study before proceeding
DOL agreed to take immediate action releasing a proposal in April 2015
DOL Authority
Employee Retirement Income Security Act of 1974

5. How it Works
DOL’s “Conflict of Interest Rule” updates the ERISA framework for “fiduciary advice”:
Covered Plan
Part 4 of Title 1 of ERISA (Qualified Plans), and
IRAs
Covered Advice
Advice to invest in, or distribute from, a covered plan
Directed to a specific recipient or pursuant to an agreement
Conflicted Advice
Advice for which the provider receives Differential Compensation (compensation that varies based upon the advice provided)
Prohibited Transaction
Advices that fits the criteria above, and
Lacks an exclusion, exception or, exemption

6. What’s not under the rule
Exclusions
Marketing of plan platforms
Retirement plan platform wholesaling
Selection and Monitoring of investment alternatives based on objective criteria
Assisting a plan fiduciary with fund selections
General Communications
Newsletters and generic
communications that are
generally “marketing” efforts
Education Carve Out

7. What’s not “under” the rule
Exceptions
Advice provided to a plan participant by an employee of a Plan Sponsor
Swap transactions
Advice to a fiduciary with financial expertise
Bank, RIA, Insurance Company or over $50m in Assets Under Management

8. Getting paid for “Fiduciary Advice”
The Exemptions
Best Interest Contract Exemption (BICE)
Prohibited Transaction Exemption (PTE) 84-24

9. The Exemptions Best Interest Contract Exemption
Receive compensation but;
Advisor and advice is still subject to a Fiduciary standard
Requires a Financial Institution
Bank, B/D, RIA or, Insurance Company
NOT an independent distributor
Requires an executed contract
“Financial Institution” and Client

10. The Exemptions PTE 84-24 Receive compensation but;
Advisor and advice is still subject to a Fiduciary standard
Disclosure requirements
Advisor Based exemption

11. Exemptions: The Implications
Fiduciary Standard: Advisor must put a client’s best interest ahead of their own.
Fiduciary Advice:
Directed to a specific recipient
Based on recipient’s particular individual investment needs
Advisor receives no more than reasonable compensation, and
Includes disclosing information about any of the advisor’s conflicts of interest

12. Disclosures
This material was not intended or written for use and cannot be used by any taxpayer for the purpose of avoiding any IRS penalty. It was written to support the marketing of the transactions or topics it addresses. Anyone interested in these transactions or topics should seek advice based on their particular circumstances from independent professional advisors. Insurance policies and/or associated riders and features may not be available in all states. Insurance products are issued by: John Hancock Life Insurance Company (U.S.A.), Boston, MA (not licensed in New York) and John Hancock Life Insurance Company of New York, Valhalla, NY MLINY ©2016. John Hancock. All rights reserved.