FEATURE THE EVOLUTION OF ROLLOVER ADVISING
Insurer Perspective: Most Attractive Future Product and Distribution Opportunities, 2016 Option
High Value
Moderate Value
No Value
Fixed indexed annuities with lifetime income benefits
50%
29%
21%
Traditional variable annuities
36%
57%
7%
Accumulation-focused fixed indexed annuities
36%
57%
7%
Low-fee, low-commission product for IRAs
36%
36%
29%
Single-premium immediate annuity
29%
43%
29%
Traditional deferred fixed annuity
29%
50%
21%
Hybrid of fixed indexed and variable annuity
29%
29%
43%
Variable annuities for fee-based platforms
29%
57%
14%
Investment and tax-deferral – oriented products (e.g., alternatives)
29%
36%
36%
Deferred income annuities (DIA)
21%
50%
29%
Structured products
21%
29%
50%
Long-term care insurance/riders
21%
29%
50%
Income guarantees in defined contribution plans
14%
43%
43%
Products designed, but not guaranteed, to produce sustainable lifetime income (e.g., dividend funds)
14%
50%
36%
Analyst note: Data are sorted by value. / Sources: Cerulli Associates, in partnership with IRI
one of two categories, he said. The “accredited investor” comes with at least a working knowledge of various investment strategies. “For that person, you can get as complicated as you want,” Royer said. But the typical small saver whom most agents and advisors deal with will not possess that level of investment understanding. That’s why acquiring additional
president’s change agenda, the DOL rule doesn’t appear to be a high priority. After all, he never mentioned it during the campaign. A Trump surrogate has said the rule will be dumped. Even if it is, many in the industry are migrating toward a fiduciary standard anyway. “We’re really taking each client on a case-by-case basis,” McNeely said. “We’re still moving forward. We are going to
regulators will agree on a standard that falls somewhere between suitability and fiduciary responsibility. At stake for agents and advisors is heightened liability tied to the recommendations they make with clients’ money. Pressure is growing from several stakeholders (including the fee-only sector) to hold anyone making investment recommendations to a “best interest” standard. As long as the fiduciary rule remains, advisors will have to consider these general guidelines when doing rollovers:
Some advisors without retirement plan expertise will find the regulatory environment prohibitive and exit this market. licensing and education is crucially important, Royer said. “This is all about knowledge,” he added. “I would recommend to all of the agents out there, learn as much as you can.”
CHANGING THE STANDARD
Unless the Trump administration effectively blocks implementation, the DOL fiduciary standard begins taking effect April 10. With everything on the new 24
have some conversations with some clients about moving to a fee-based model.” Despite a political environment that favors elimination of the DOL rule, many are hesitating because it isn’t a one-party or one-person agenda. The rule was first put forth during President George W. Bush’s administration, and the Securities and Exchange Commission is working on its own version. Speculation is making the rounds that
InsuranceNewsNet Magazine » February 2017
» Sell under the full best interest contract exemption. This means significant recordkeeping and disclosures, as well as a signed contract agreeing to act in the client’s “best interest.” » Sell under the “level-fee fiduciary” exemption, which is a much less burdensome version of the full BIC exemption. An LFF receives only an advisory fee and no additional compensation.