Poll: Biggest Concerns with Final DOL Rule

[Brian Anderson]

Time for a new poll question, and what better topic than the one that’s been on almost everybody’s mind in the past couple of weeks – the DOL’s final fiduciary rule. We’ve had some coverage on industry reaction to the rule and there have been a couple of great threads about it (links below), but I thought a poll asking what specifically concerns you the most would be appropriate.

So here goes - and if your biggest concern doesn't fall under one of the choices, please share what it is in a post.

http://www.insurance-forums.net/forum/annuities-forum/final-dol-fiduciary-regulations-t81579.html

http://www.insurance-forums.net/forum/life-insurance-forum/dol-rules-impact-agent-t81574.html

 

[DHK]

You didn't add in commission disclosures. I know that NY has had this for a while, but this concerns me.

 

[scagnt83]

You didn't add in commission disclosures. I know that NY has had this for a while, but this concerns me.

Technically that would be part of BICE Compliance. BICE is what requires the commission disclosure. You will not have to disclose comp on a MYGA or SPIA.

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My biggest concern is that this country keeps adding toothless regulations while failing to adequately enforce the regulations that are already in place. Laws & Regulations are now based on feel good sound bites and partisan game playing.

 

[DHK]

Technically that would be part of BICE Compliance. BICE is what requires the commission disclosure. You will not have to disclose comp on a MYGA or SPIA.

True, so let me clarify: It's really not the client's business to know how much I am paid on a FIA.

However, since disclosure will be necessary, I am concerned about how a client can react and respond to seeing the commissions I would be earning for this particular transaction.

 

[walthamny]

I don't think the compensation disclosure matters to much for my business. In many ways, as a RIA, I already disclosed my earnings before. Now it would make it difficult to recommend a 500k annuity with a 6 to 8% commission upfront. Instead you would either sell a smaller annuity with rest of the money going into managed funds where I collect AUM fees or still sell an annuity with trail compensation. They are all basically the same at the end compensation wise.
I always found that when I am in competition situation, disclosing commissions is the best. Even if I don't close the case, it is easy to go back and earn some future business. And if the other advisor just closes the sale and collects the commission and forgets to service, you can go back in. This just happened to me recently.
For the seminar fixed annuity salesman, the new rules will be tough as they don't manage money and their income will drop as most likely carriers will put some caps on qualified money as well. I can easily see them saying don't put more than 70% of someones qualified money into FIA.

 

[scagnt83]

I could care less about commission disclosures. If a client asks I tell them.

And I disagree that it is not their business to know. When a professional is making recommendations for a consumers life savings, that consumer has a right to a transparent transaction and to have any possible conflicts of interest disclosed to them. Especially when that recommendation locks up those life savings for anywhere from 6-15 years.

If annuity A pays 8% comp, and annuity B pays 4% comp, and the agent is telling the client to go with A over B... that client has a right to know the agent is getting paid double on the one they are recommending. Especially if there are differences between the two products.

Ive had clients ask before, especially when Im recommending one product over another. Ive never had them push back on what I was getting paid. Of course I always compare it to if they were using a stock broker or fee based planner over a 10 year period. The comp is often less for the annuity over that time frame.

People understand if explained in context. And they have a right to know when it comes to life changing financial decisions of this complexity, importance, and permanence.

 

[DHK]

My problem is that I don't want "commission envy" to interfere with my ability to ask for and receive quality referrals.

If you're working with blue-collar, middle America, and you sell a $100,000 FIA for a 5% (reasonable) commission, you're earning $5,000. I don't want that person to think "Hey, he just made $5k off of me and now he wants referrals too?!"

I know I could easily compare the risks, returns, costs, and commission structures of mutual funds, wealth management, and variable annuities to fixed indexed annuities and make them feel better about the transaction. That's not a problem. Asking for referrals on top of that... it feels that it would just make me look greedy.

Remember that part of the initial trial and conviction of Glenn Neasham was his compensation for selling the annuity. I'm sure that a jury of peers felt that he was earning a large commission, regardless of the % actually paid.

Maybe it's just in my head, but I'd rather be able to handle that before it becomes an issue.

 

[vic120]

I could care less about commission disclosures. If a client asks I tell them.

And I disagree that it is not their business to know. When a professional is making recommendations for a consumers life savings, that consumer has a right to a transparent transaction and to have any possible conflicts of interest disclosed to them. Especially when that recommendation locks up those life savings for anywhere from 6-15 years.

If annuity A pays 8% comp, and annuity B pays 4% comp, and the agent is telling the client to go with A over B... that client has a right to know the agent is getting paid double on the one they are recommending. Especially if there are differences between the two products.

Ive had clients ask before, especially when Im recommending one product over another. Ive never had them push back on what I was getting paid. Of course I always compare it to if they were using a stock broker or fee based planner over a 10 year period. The comp is often less for the annuity over that time frame.

People understand if explained in context. And they have a right to know when it comes to life changing financial decisions of this complexity, importance, and permanence.

I have to disagree, Does a surgeon tell you how much gets paid on one procedure over another? does a contractor tell you how much he makes on 1 plan over another?

Just because you make a higher commission on 1 product over another does it make the lower comshion a righteous sale and the the other greedy?

Look at what was done by politicians painting the Ins companies as greedy creating anger in order to pass a healthcare bill that has been a disaster.

 

[scagnt83]

I have to disagree, Does a surgeon tell you how much gets paid on one procedure over another? does a contractor tell you how much he makes on 1 plan over another?

Just because you make a higher commission on 1 product over another does it make the lower comshion a righteous sale and the the other greedy?

Look at what was done by politicians painting the Ins companies as greedy creating anger in order to pass a healthcare bill that has been a disaster.

A surgeon sends you a bill. They also will give you an estimate up front if you ask. If you have insurance you can also get an estimate from the carrier on your out of pocket expense for that procedure at a certain facility or with a certain specialist if they are in-network. Many carriers let you look it up on your online account.
Same with a contractor, they give an estimate, and send you a final bill. In some states contractors are required by law to disclose how much sub-contractors charge if a client asks.


More relevant to the situation, no 1 single thing makes one product better than another. Just because one has a lower comp does not mean it is the best. No one is saying that.

What is being said is that the client has a right to transparency. So that they can judge for themselves if comp is relevant to the situation and if it may or may not affect the recommendation being given.

 

[vic120]

A surgeon sends you a bill. They also will give you an estimate up front if you ask. Same with a contractor. In some states contractors are required by law to disclose how much sub-contractors charge if a client asks.


More relevant to the situation, no 1 single thing makes one product better than another. Just because one has a lower comp does not mean it is the best. No one is saying that.

What is being said is that the client has a right to transparency. So that they can judge for themselves if comp is relevant to the situation and if it may or may not affect the recommendation being given.

Everyone sends you a bill just because a surgen send you a bill doesn't mean you know how much is actually going in his pocket and a I have seen how contractors bill if wood cost $500 it shows on the bill $1000 and so forth means nothing

This means nothing, However there has been a coordinated effort by the media and others to create an anger towards the so called rich and and insurance industry as a whole. And just because an agent is not rich be perceived that way. It will do more harm than good in some cases,

Although I do believe in many cases it will not matter, This still does not make it right

In most other industries there is no such disclosures. Yes a client has a right to know I get a comshion but how much is not a concerns. If the plans are researched properly the better plan should win

I know When I sell a plan I do not consider which has higher % as long as there is a %. this doesn't mean that some time the highest commission isn't the better plan