Annuities

We’ve Already Passed the Finish Line: A DOL Comment


Annuities

Today (Aug. 10), the U.S. Department of Labor’s request to delay the Fiduciary Rule’s full implementation was revealed. As with most regulation, there are technical aspects to the delay that will likely be argued by supporters and opponents. I want to make one thing clear: We’ve already passed the finish line for fiduciary status. 

 

Undoubtedly, the rule’s documentation could be less onerous. But, we shouldn’t ignore the fact that fiduciary status is here – and, it’s here to stay. We must adapt to it. We must innovate toward it. We must improve our client experience. We must keep our clients’ interest before our own. And, we must move the retirement income community forward … now. 

 

Many people will use this announcement to recommend that we go back to the old ways of doing business. It’s too late. Clients are beginning to ask their financial advisor if they are a fiduciary. Working with the clients’ interests has always been a priority, and the way that we operate our business. Today, really since the release of the proposal in 2016, fiduciary status is a table stake, a requirement and, most importantly, an expectation. In order to be successful in business, you have to meet or exceed the clients’ expectations. The value you bring is determined by how much you bring to the client above what they paid. The client expects maximum value, so you have to look at your marketplace beyond the regulation. 

 

The market has already begun to shift toward working in fiduciary status for all client relationships. Transparency continues to grow as an integral part of pricing fees and commissions. Disclosure has become a part of the product fulfillment process. Greater client awareness and education about solutions have become part of more sales presentations. In many ways, our industry has improved more in the last 12 months than it has in the last decade. 

 

I encourage those in the retirement income space to continue the move forward toward the fiduciary world. That doesn’t mean some of the DOL’s unintended consequences don’t need to be dealt with over the next 18 months. And, moving toward a fiduciary world doesn’t mean the elimination of commissions. However, we can’t go back on our commitment to serve our clients. With the complexity of retirement, there has never been a more important time to engage with Americans and help them solve their most difficult problems – longevity and income. 

 

Please stay connected with us to learn more ideas on how to best serve your clients in an uncertain regulatory and economic environment. Ash Brokerage has been active in the comment periods, and we look forward to answering our industry challenges through innovation, education and practice enhancement. 

 

Winning Strategy

When you run a race, you never look back. As you change your retirement income practice toward a fiduciary status, don’t look back. Keep your focus forward on improving your clients’ position, their experience with your firm, and how to best serve them. 

 

About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of retirement at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.”

 

DOL Fiduciary Rule Retirement

Vision for What Your Effort Will Deliver


Annuities

A couple of weeks ago, I was talking with my business coach, CJ McClanahan, and he said something that struck me: “People don’t have a vision for what the effort is going to deliver.”  If you think about that statement, it applies to several parts of our lives as financial planners.  

 

Vision for Your Practice

In today’s increasing regulatory environment, we tend to focus our attention on fighting the U.S. Department of Labor rule. In practice, the rule has already taken effect as clients are already asking planners if they are fiduciaries. For the last nine months, banks and wire houses have been converting their clients, for better or worse, to fee-based accounts. And, as I travel around the country, I hear too many people talking about what they are going to do to fight the rule, rather than what they are going to do to implement the rule in their practice.  

 

The rule will undoubtedly require a lot of effort to fully implement. However, our clients are likely to benefit from the changes that the rule suggests. Putting our clients’ best interests first has always been a part of our ethical makeup. However, the documentation needed to prove this status will require changing how we process our client files, complete our paperwork, and follow our sales process. 

 

That said, we tend to lack the vision of what our businesses may be like when we implement the rule. Your clients will likely have more trust in you. They will likely discuss more concerns with you. And, they will be more likely to refer you to other like-minded prospects. Those items can make your business more profitable and more efficient. 

 

Vision for Your Clients

At the same time, our clients lack vision in the financial planning process. Most clients spend more time planning this year’s vacation than they do planning their retirement. We have to do a better job of providing that vision, through education that motivates them to complete the planning process.  

 

Without a doubt, the planning process can be onerous if done properly. Planning should consider the risks of retirement, including longevity, legacy and charitable desires, taxes, and health care, to mention a few. Each of those risks needs special consideration, evaluation, and analysis to prepare a proper recommendation for each client’s concerns, goals, and objectives. 

 

Few people rarely want to think about those risks, let alone plan for them or act upon them. It’s our job as financial professionals to create a positive vision of the outcomes for our clients: sustainable retirement income, better lifestyle management, and more time with children and grandchildren.  

 

Eyes on the Prize

In the end, vision becomes an important part of the planning process and of our business models. We must keep the vision of all the changes in perspective, but we must also envision the benefits of change. In doing so, we can easily put forth the efforts needed today for a better business and happier client relationships. 

 

Winning Strategy

Few people maintain the vision of all the effort that change requires in order to improve. That applies to clients and planners. Take time to think about where your clients need to be in the future and where your business needs to be in three to five years. Keep that vision in the front of your mind for proper motivation to change.  

 

About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of annuities at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.

Annuities DOL Fiduciary Rule