DOL Ruling

DOL Fiduciary Rule Planning For the Impacts (For the full details click here to read the white paper in its entirety)

The Department of Labor (DOL) Fiduciary Rule has created quite a stir in the Life and Annuity marketplace.  At its core, your financial advisor is required to act as a fiduciary when selling any financial instrument that is purchased using pre-tax funds, also known as “qualified” funds.  The primary products at risk are Annuities which are often purchased by rolling funds from a 401K or other qualified asset to the Annuity, to both extend the tax deferral and provide a much safer shelter for the retirement assets into retirement.  Yes, they are more expensive than a direct mutual fund purchased in your 401K but your 401K doesn’t offer you the option to receive a set income for the life of you and your spouse similar to a pension, nor does it provide an option to ensure that you only take the gains that occur in the market while eliminating any losses.

Affected Areas

This whitepaper, though not all inclusive, is designed to help you evaluate and consider the various areas of your organization that must have workflow, processes, and system updates in place in order to comply with, and to clearly demonstrate compliance with the new regulation in a court of law.

This ruling requires organizations to make general process redesign and workflow changes across many aspects of the sales, servicing, operations, and technology areas.   The primary areas of focus are summarized below with a more in-depth review in the details of the document.



Deadlines for Compliance





So when does all of this go into effect, and when do Carriers, Distributors and Advisors need to be ready?

April 10, 2017:  Requirement to Act as a Fiduciary –  Carriers and Distributors must begin acting as a Fiduciary as of April 10, 2017.  This requires the following:

  • Designate an Overlord – Someone must be designated at the financial institution as completely responsible for fiduciary compliance.
  • Fiduciary Activity – All Advisors must act as a Fiduciary. This includes at minimum a transitionary Best Interest Contract Exemption agreement.
  • Policy Document – Financial Institutions who intend to pay commissions must prepare a written document of policies to comply with “Impartial Conduct Standards”, identify all conflicts of interest and measures in place to avoid them.
  • Reasonable Compensation – Compensation paid to your representatives must be reasonable.
  • Reasonable Fees – Fees for the products sold must be reasonable.

January 1, 2018:  Requirement to provide and store all required documents –  The DOL understands that the industry needs time to implement the systems required to comply with the details of the disclosure.   Advisors must act in the client’s best interest with regard to recommendations as of April 10, 2017.  However, there is nearly an additional nine months provided before the necessary disclosures are required.   January 1, 2018, is the date that all systems must be in place and the financial institution must be able to provide detailed disclosures on or prior to contract execution.  Additionally, the Financial Institution must provide all online documents, or on demand documents regarding the detailed fees and commissions paid specific to a client’s Annuity or Life Contract upon request.  Some of the most critical items that must be addressed are:

  • Best Interest Contracts Required – The full requirements of the Best Interest Contract must be in place at the time of transaction in order to sell and earn a commission.
  • Transaction Disclosures Required – Required to provide detailed fee and commission disclosures for each transaction at or prior to execution of the transaction. Includes compensation of any kind including cash, non-cash, reverse charges, trips, etc.
  • BIC Negative Consent Disclosure – Requirement to notify all existing clients that their contract is now operating under a BIC, this can be put in place using an automatic notice with an opt-out provision.
  • Website Disclosure Operational – Clients need to be able to log into a website to view disclosures and the BIC if desired. Clients are not required to view the site, but Financial Institutions are required to provide it.
  • General Disclosure – Provide a general disclosure on the website, and in any transaction that prominently states the requirement to act in the client’s best interest at all times.
  • On Demand Disclosure – Ability to generate disclosures and fees on any historical transaction within 30 days of client request.
  • Annual Disclosure Notifications – Must provide an annual disclosure to all clients whose policies are not in a “Grandfathered” status.

Please contact us at if you would like to discuss specific projects or challenges you may face in preparing to support the full extent of the DOL ruling.