1. You Are Welcome At Any Session!
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2. Understanding The World of New Standards
Anthony “Tony” Boquet, CLU®, ChFC®, CASL®, CLF®, FSCP®, FIC
Vice President / Solutionary
The American College of Financial Services

3. Fiduciary vs. Standard of Care
Overview
The American College of Financial Services / Ethics behind the Client’s Best Interest
Conflicts (Advice = Compensation)
Unanswered Questions
Conclusion and Student Questions

4. How did we get here? February 2010 Dodd-Frank Act
October 2010 DOL Proposes Rule
September 2011 DOL Withdrawal Rule
April 2015 DOL Re-proposes Rule
April 2016 Final Rule – Extended – Extended a second time
Currently DOA

5. DOL Ruling Snapshot
Government interest in retiree’s financial stability
Have seen laws, regulations, memoranda, research, speeches
Protecting seniors
Making sure they get good advice
Determining the appropriate vehicles used for financial matters – all of this with a focus on compensation for the advice
What has been done?
Expansion of Medicare for Seniors – ACA
Creation of the myRA – a no fee IRA/savings vehicle
Emphasis on the Fiduciary standard

6. Conceived Conflict (Advice = Compensation)

7. Examples of Compensation
Commission and transaction based business models
Asset Under Management (AUM) discretionary accounts
Flat fee (annual)
Hourly fee
Combination of revenue

8. Complying to Satisfy
Acknowledge fiduciary status with respect to the advice to the Client
Adhere to “Impartial Conduct Standards” which requires the fiduciary advisor to:
Give advice that is in the Client’s Best Interest
Charge no more than “reasonable compensation”
Make no misleading statements about investment transactions, compensation and conflicts of interest
Implement policies and procedures reasonably and prudently designed to prevent violations of Best Interest Conduct Standards
Refrain from giving or using incentives for advisers to act contrary to the customer’s best interests
Fairly disclose the fees, compensation, and Material Conflicts of Interest, associated with their recommendations

9. Unanswered Questions

10. Moving Forward
Implement, train, educate and mold company practices to meet the new standard of care environment:
How do advisors adhere to impartial conduct standards/act in best interest/without being swayed by compensation?
How do advisors conform to various Standards of Care?
ie. NAIC, CFP Board’s fiduciary responsibility or others
To what level will companies be responsible for monitoring advisors actions and conflicts?

11. Product Specific Business Model Issues
Annuity producer
Fixed
Variable
Mutual fund business
Fee oriented business
AUM
Flat/other fee

12. What Remains Unanswered?
Legal challenges? Could it be overturned in whole or in part at some point?
What will the impact be on consumers?
What is prudent advice and reasonable compensation?
How far does retirement income/distribution advice go?
Will this cause a boom or bust for the financial planning world?
What other products fall into what level of care?
What about liability? Will this be a big burden and to whom?
Entity rules? - CFP Board, SEC or NAIC
Compensation models moving forward?
How does the rule place an emphasis on source of funds in a rollover conversation?

13. Moving Forward
Retirement planning will continue to change and draw attention
Need to think about changes with planning flexibility
More Comprehensive Planning – must
Stay current!

14. Additional Information
The American College New York Life Center for Retirement Income
The American College Granum Center for Financial Security
Retirement Income Certified Professional® (RICP®) designation
The American College Blog

15. Thank you!
TheAmericanCollege.edu