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Leverage DoL Requirements into a Strategic Advantage

A NEOS Whitepaper

Many believed that congressional actions would halt the DoL’s progress, but with the final ruling available, the industry is bracing itself for changes that will dramatically impact the role and rules of financial planners, brokers, and agents selling and servicing insurance-based investment products. Anyone giving financial advice on retirement accounts (including IRAs) is considered a fiduciary as defined in the Employee Retirement Income Security Act (ERISA). Under the new rules, categorizing advisers as fiduciaries will trigger a whole new set of compliance rules.

The DoL believes that an adviser has a conflict of interest if he or she receives incentives to steer clients into one investment product over another. Clients are unaware of these incentives because they are hidden in fine print or not disclosed at all. These fees give advisers motivation to make recommendations that generate the highest revenue for them, rather than the best investment return for their client. Independent research cited by the DoL suggests that conflicts of interest cost middle-class families billions of dollars each year.

At its core, the new regulatory package is very simple: it requires retirement investment advisers to put their clients’ best interest first. It does this by closing existing loopholes and expanding the types of retirement advice subject to fiduciary protections. Insurance companies subject to these rules must have an understanding of how their advisers, technology, and operations will be affected before beginning implementation.

This whitepaper provides insurers a comprehensive understanding of the trends impacting these three areas and recommended “Next Steps” to adhere to requirements quickly and in their best interest.

Leverage DOL Requirements

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