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Chuck Jaffe: Here’s The Truth About A Controversial New Law To Protect Investors
Maybe Jaffe was intending to report on the revised regs, but never got around to it. The Powell column refers to "Chuck Jaffe’s column, Fiduciary standard leaves more questions than answers."
@msf:"Maybe all that Jaffe did was roll the date on the column - it is now dated April 6th, but check Ted's link: 2016-03-29 in the URL". Thanks for pointing this out. That's exactly what he did, and it makes me look like an idot. I give Chuck a lot of exposure on the MFO Board, and if pulls this stunt again he's history. Regards, P.S. I just fired off an E-Mail to Chuck about the matter.
In many ways the new regs are a joke. This was supposedly all about insuring advisors do what is in the best interests of investors. But somehow non-traded REITs, variable annuities, and other high-commission products (things that were not in the proposed regs at one point) are now back in. Do you suppose the insurance and banking and commission brokerage industry had a say in this travesty...maybe a little campaign donation money for key politicians to put pressure on the DOL? In typical government fashion, the DOL's new regs are contained in 7 separate documents totaling 1,023 pages. Not as bad as Dodd-Frank, but still ridiculous. It will take months to translate specifics into English (something the Feds do not speak or write). Ask me what I REALLY think of this mess.
"But somehow non-traded REITs, variable annuities, and other high-commission products (things that were not in the proposed regs at one point) are now back in."
Could you suggest where a VA exemption was broadened from the original DOL proposal? I'll check into BICE changes if you feel that there's been some broadening of exemptions there. (My recollection is that you could drive a truck through the original in terms of compensation, so long as the investment itself was genuinely in the investor's best interest.)
The DOL’s proposal would not allow exemptions for variable annuities when they are sold to IRA account holders, unless they are accompanied with a Best Interest Contract Exemption
Emphasis added.
The final amended PTE 84-24 still revokes its exemption of VAs. (You can find its discussion specifically of insurance products starting at p. 33)
In discussing the history of the proposal (on earlier pages), that paper states:
on a going forward basis, the Department proposed to revoke relief for insurance agents, insurance brokers and pension consultants to receive a commission in connection with the purchase by IRAs of variable annuity contracts and other annuity contracts that are securities under federal securities laws
It goes on to provide the Description of the Amendment and Partial Revocation of PTE 84-24 starting on p. 20. This preserves the exemption for Fixed Annuities, while making it clear that
A Fixed Rate Annuity Contract does not include a variable annuity, or an indexed annuity or similar annuity. ... the exemption does not cover variable annuities, indexed annuities or similar annuities, in which contract values vary, in whole or in part, based on the investment experience of a separate account or accounts maintained by the insurer or the investment experience of an index or investment model.
If it were Obamacare for financial planning, the government would be subsidizing advice for most households. But then how could one say it was too expensive for "families with modest bank accounts"?
Don't think too much, it will only make your head hurt.
Comments
Been there, done that (and commented). Here's Ted's March 29th link to what seems to be the same column:
http://www.mutualfundobserver.com/discuss/discussion/comment/76501/
Edit: Jaffe appears to have added two lines (hard to tell, don't have old version): Jaffe isn't the only one playing games with dates at Marketwatch. That Powell column has a link dated April 4th, but the column itself is dated today (April 6, 9:50 AM):
http://www.marketwatch.com/story/new-conflict-of-interest-rule-will-protect-retirement-investors-2016-04-04
Maybe Jaffe was intending to report on the revised regs, but never got around to it. The Powell column refers to "Chuck Jaffe’s column, Fiduciary standard leaves more questions than answers."
But the link:http://www.marketwatch.com/story/fiduciary standard leaves more questions than answers is a link to nowhere.
Regards,
P.S. I just fired off an E-Mail to Chuck about the matter.
(Sorry, couldn't resist, no disrespect intended.)
Will be interesting to read his response.
Could you suggest where a VA exemption was broadened from the original DOL proposal? I'll check into BICE changes if you feel that there's been some broadening of exemptions there. (My recollection is that you could drive a truck through the original in terms of compensation, so long as the investment itself was genuinely in the investor's best interest.)
The original proposal replaced the PTE 84-24 exemption for VAs with coverage under BICE. See, e.g. this BenefitsPro column
http://www.benefitspro.com/2015/06/04/dols-proposal-significantly-affects-annuities Emphasis added.
The final amended PTE 84-24 still revokes its exemption of VAs. (You can find its discussion specifically of insurance products starting at p. 33)
In discussing the history of the proposal (on earlier pages), that paper states: It goes on to provide the Description of the Amendment and Partial Revocation of PTE 84-24 starting on p. 20. This preserves the exemption for Fixed Annuities, while making it clear that
http://www.speaker.gov/general/obamacare-financial-planning
Don't think too much, it will only make your head hurt.
Boy, ain't that the truth!