I have nothing to say about Brexit itself and neither did anyone else until the UK electorate shocked the world by voting for the unthinkable. I do find humor in the media using the popular mashup in virtually every subject line! It does roll off the tongue, doesn’t it? Brexit. All of the negative news, headlines and market volatility does however remind me of the importance of the work of advisors. How many clients have asked about Brexit? How many have asked if it is time to sell stocks? How many would have sold in a panic absent calm, steady advice to stick to the plan? Financial advice done right is noble work. Don’t let anyone convince you otherwise.
Thanks to Greg Kalosieh, Cody Wilson and Katey Marina for planning and executing a fantastic national conference at Amelia Island. Discover 2016 was SSN’s most successful conference yet, with more reps, more sponsors, more breakouts, and better opportunities to connect than ever before. You can watch the video recap of the event here http://www.joinssn.com/discover-amelia-island-2016/
Much of conversation at Discover focused on the DOL Fiduciary Rule, which was announced in its final form in April. The general consensus is that the final rule is less onerous than expected, however still impactful to virtually all of SSN advisors’ business models. We have received numerous questions about the rule, so here are some points that address common questions:
- IRA accounts may currently be served under a duty of suitability but will be subject to a fiduciary duty when the rule becomes effective.
- Conflicts of interest, including non-level compensation (AKA commissions), will be prohibited and allowed only through prescribed Prohibited Transaction Exemptions (PTE).
- Commissions will be allowed under a new PTE called the Best Interest Consent Exemption (BIC or BICE), a legally binding contract, enabling clients to bring suits to a court of law, rather than limiting their grievances to arbitration.
- Compensation must be “reasonable”.
- Existing IRA accounts will be sent a negative consent letter. If there is no response, no additional change or disclosure is needed. However, any new monies invested for those accounts after the effective date will require the heightened standard of care, disclosures, etc.
- The act of recommending a rollover from a sponsor plan to an IRA will itself be a fiduciary act.
- The previous ERISA exemption for fixed indexed annuities (PTE 8424) no longer applies, and these products will be subject to the new rule.
The one thought I asked all attendees to take away from Discover is that SSN and Ladenburg have deep resources committed to solving this puzzle and we will be one of the firms that succeeds in adapting to the new regulatory and legal landscape. Many small firms however will choose to close, sell or merge rather than invest in compliance. In fact, SSN has already been approached by firms and advisors to acquire their business, as they know their existing organizations will not be able to effectively address the rule and support advisors at the same time. This is a testament to the strength of our organization, and the knowledge that we will be able to weather the storm and come out on the other side a stronger organization.
We have been messaging for several months now on an exciting new component of our technology offering which will soon become known as Fusion. Fusion will enhance the part of FOCALweb dedicated to new business processes including account opening and document generation. In addition, Fusion will bring all new functionality in the forms of an analytics dashboard and client account aggregation. Testing begins in August and the first of several deployment waves could begin as early as October. To prepare branch office personnel for the migration, SSN has added a new position, a dedicated trainer, who will be focused for the remainder of the year on this new technology.
Please join me in welcoming Bennett Landry Marina to the SSN family (see pictures above). Bennett was born on February 24th and recently matriculated in day care so his talented mommy, Katey, could return to her day job in SSN’s marketing department. Bennett is a doubly important part of the SSN family because his daddy, Jason Marina, also works at SSN in the operations department. Happy zero birthday, Bennett, and congratulations Katey and Jason.