Are You Doing Your DOL 'Due Diligence'?

Are You Doing Your DOL 'Due Diligence'?

Submitted by admin@cbuteam.com on
Just last month, the new DOL Rule Updates went into effect, starting June 9th. During our last Producer Forum, we invited Kyle Mann, CMO of Magellan Financial,
to speak about some of the changes, and how they could affect you and your business. Here are some takeaways that are important to remember: 
 
1. The Producer must act according to a fiduciary standard (PTE 84-24) 
2. The producer must provide client with the required disclosure. The disclosure should be signed by the client and retained for 6 years 
3. The producer must accept only reasonable compensation.
 
1. PTE 84-24 outlines
  • Agent MUST act in the best interest of the client
    • Prudent person standard
    • Based on client needs
    • Without regard to the financial professional's interests
  • Put client interest first
  • Avoid conflict of interest including recommendations on the following
    • Securities and investment property
    • Qualified accounts, such as IRAs and 401Ks
    • Rollovers, transfers, or distributions from a plan or IRA
    • Selecting an investment account (brokerage or advisory-transaction or fee based)
    • Required minimum distributions (RMDs) 
2. Client disclosure, the following must be disclosed and signed.
  1.  Relationship to Insurance company and product limitations
  2.  Commission received by financial professional-Expressed as a % or premium
  3.  Material conflicts of interest
  4.  Product charges, fees, penalties and adjustments 
3. Producer must accept only reasonable compensation
 
How to submit business June 9- Dec 31:
1. NEW WRITTEN CLIENT DISCLOSURE
  1. Some carriers have indicated they will provide templates for this and a guide on how to complete
  2. Magellan and generally Carrier  will not need to see it
2 . DUTY TO COMPLY AND DISCLOSE IS RESPONSIBILITY OF PRODUCER
  1. Keep with your files for 6 years 
June 9 client disclosures:
1. All commissions received as a result from the sale
2. All material conflicts of Interest-includes cash and non cash compensation received in connection with the sale
3. Product Fees and Expenses-may be provided by carrier
 
What steps should you start taking?
  • Complete a PTE 84-24 Disclosure Form for all sales involving qualified retirement accounts.
  • Document your process for making recommendations, including your client's needs and risk profile.
  • Replace all carrier applications with the most updated forms to include any additional required disclosures.