This post is sponsored by FolioDynamix.
The Labor Department’s fiduciary rule changes are reshaping the way the financial advisory industry operates, creating a need for technology that will help with compliance and portfolio management.
Here we talk with FolioDynamix President and Chief Operating Officer Steve Dunlap about how the new rules are changing the business and how advisors can create better customer experiences while balancing these new demands.
Question: How does the Labor Department’s new fiduciary rule change the landscape for financial advisors?
Steve Dunlap: There’s been a lot of discussion about how the rule was “softened” from the original proposal, but I believe the changes are still fairly dramatic for Registered Representatives who do significant commission business. Because all IRA accounts will now be subject to a fiduciary obligation, or require a BICE (best interest contract exemption), there is a major adjustment to be made in terms of paperwork and suitability standards, and frankly, the broker-dealer model does not necessarily lend itself to making these changes. (read more…)
The Labor Department’s proposed fiduciary rule has reached the White House’s Office of Management and Budget, and professionals who provide retirement advice are now awaiting the final version. Meanwhile, states are considering legislation to allow reserve calculations that could benefit life insurers’ solvency. Deloitte experts explores these issues’ effects on the life insurance and annuity industries in a report and in a recent interview with SmartBrief.
Uncertainty exists around the effective date and implementation schedule of the Labor Department’s proposed rule, although major provisions are expected to take effect this year, says George Hanley, leader of Deloitte Advisory’s U.S. regulatory and compliance group.
“Companies will need to develop a ‘playbook’ for all affected areas and be prepared to implement [that] playbook when the rule becomes effective,” he says.
Insurers need to thoroughly understand the proposal and its likely effects on annuities, retirement plans, mutual funds and other products, as well as distribution, operations and IT, Hanley says. (read more…)
Well, that’s one way of keeping your name in the headlines…
Much has been made this week about comments by new Minneapolis Federal Reserve president Neel Kashkari calling for big banks to be broken up or transformed into utility-like entities. The merits of Kashkari’s ideas aren’t really worth dissecting because it is far more appropriate to simply chuck them in the old “ain’t never gonna happen” file. After all, if the financial crisis itself wasn’t enough to drive policymakers to break up the big banks, then some comments nearly a decade later from the Land of 10,000 Lakes isn’t going to do it either.
The evolution of Kashkari himself? Now that is a fascinating story. What could make this creature of Wall Street turn on his own former colleagues? Why would the savior of the big banks go after the big banks?
Kashkari the Savior
Kashkari first hit the national spotlight when he was tapped to run the Treasury Department’s Troubled Asset Relief Program. (read more…)
The Foreign Account Tax Compliance Act, commonly known as FATCA, has been called everything from “America’s manifest destiny law” to an “American tax nightmare.”
The ultimate goal of FATCA, enacted in 2010, is to enable the IRS to extend its information-gathering powers on a global scale. It combats offshore tax evasion in two distinct ways:
- by requiring U.S. citizens, including those living abroad, to report their holdings in foreign financial accounts and their foreign assets on an annual basis to the IRS, and
- by requiring foreign financial institutions (“FFIs”) (which include just about every foreign bank, investment house and even some foreign insurance companies) to report to the IRS (or to their government, which then reports to the IRS) the balances in the accounts held by customers who are U.S. citizens.
If U.S. citizens don’t comply with the reporting rules, they can be subject to severe penalties if caught by the IRS. (read more…)
Nearly a decade after the onset of the financial crisis and following billions of dollars of costly regulatory reforms, some fundamental questions are being asked about how prepared the financial system is to combat future financial crises. Quite simply: Is the global financial system prepared to fend off another crisis?
The World Economic Forum in Davos is one of the places where today’s leaders in finance gather to ponder such questions. When it comes to financial stability, the Davos minds paint an uncertain picture – particularly in Europe.
Jeroen Dijsselbloem, president of the Euro Group and finance minister of the Netherlands, believes Europe currently sits in a very vulnerable position. “Our shock absorption capacity in Europe is still far to small. We are still over-leveraged in households. Many SMEs are overleveraged. Governments still don’t have a lot of fiscal space. … If the next crisis were to come, who is going to buffer the economic shock? (read more…)