DOL Rules and Impact on Agent

[DHK]

Because the BICE can be signed upon opening an account, this might actually be a "loophole"? That, or if life companies are aware of this, they may include this as part of a life insurance application.

Those days are NOT over unless you don't know how to defend how a life policy, properly structured and funded is SUPERIOR to a qualified plan and be able to explain it in a court of law.

 

[pfg1]

It does effect life agents if you are a comparing a IUL for example to a over funded 401K. A lot of my clients have stopped over funding their 401k and putting it into Min death max funded IUL. I think those days are over.

I hope that isn't the case. Seems like it would make good sense to do both. If you told someone to liquidate the 401k and fund PLI... that might be a different story. I guess we'll find out. You can certainly make the case of guarantees vs market risk...


And why is Ramsay safe? So he can spew his biased - non licensed garbage, and if the client follows his "advice" and it causes them harm, its ok. But a licensed professional with good intentions can get in big trouble. This is what happens when big brother get's involved in anything... its always a$$ backwards.

 

[BYSFG]

I hope that isn't the case. Seems like it would make good sense to do both. If you told someone to liquidate the 401k and fund PLI... that might be a different story. I guess we'll find out. You can certainly make the case of guarantees vs market risk...

Im also one of those person who believe in, "dont put all your eggs into one basket."

If an employer is matching 100% wouldn't that be a no brainer to some? Of course it all falls onto a per individual basis. The most recent thing Ive read about 401k was back tested scenarios, usually broke even or made a decent gain. When comparing to IUL guess it also depends on what % youre illustrating it at.

Because the BICE can be signed upon opening an account, this might actually be a "loophole"? That, or if life companies are aware of this, they may include this as part of a life insurance application.

Those days are NOT over unless you don't know how to defend how a life policy, properly structured and funded is SUPERIOR to a qualified plan and be able to explain it in a court of law.

Wouldnt be surprised if thats the way it goes. Suitability acknowledgements are already the norm, whats one more sheet to sign. Heck, depending on how you submit business, youve already got like 3-5 sheets the client needs to sign, most of the time indicating they understand what it is theyre applying for and its suitability etc etc.

Wonder if you could defend yourself by one lining it, "Sir, wouldn't you want upside potential, downside protection?"

Pretty sure that's how that phrase went.

 

[DHK]

No, you won't be able to "one line" it in front of an attorney.

I have a comparison matrix that I put together of 23 different line items that prove the superiority of properly structured life insurance over 401(k)/IRA, Roth IRA, 529 plans, and brokerage accounts. It's quite detailed and, as Fox News would say "Fair and Balanced." And yes, I also point out various perceived negatives, and the one obvious flaw regarding the life insurance strategy (requires ongoing contributions to remain viable).

I would not have any problems detailing my recommendations and showing a fiduciary responsibility in the process.

And no, I'm not sharing it here.

 

[BYSFG]

No, you won't be able to "one line" it in front of an attorney.

I have a comparison matrix that I put together of 23 different line items that prove the superiority of properly structured life insurance over 401(k)/IRA, Roth IRA, 529 plans, and brokerage accounts. It's quite detailed and, as Fox News would say "Fair and Balanced." And yes, I also point out various perceived negatives, and the one obvious flaw regarding the life insurance strategy (requires ongoing contributions to remain viable).

I would not have any problems detailing my recommendations and showing a fiduciary responsibility in the process.

And no, I'm not sharing it here.

Darn, there goes the one liner, out the window.

Regarding comparisons, thats awesome, its something that everyone should have.

As my other posts suggests, this is the first year that Im really pushing this business. Ive got some older works Im working on to get updated, if youre open to it, do you mind if I pick your brain every now and then in regards to this? -IUL vs "XYZ"

And yes fellow agents, Im petty. I will not hesitate to ask for advice and help.

 

[DHK]

Sure, I can help you on a limited basis. I've got a couple others that I've been helping here and there too.

Just contact me via Facebook: https://www.facebook.com/davidkinderfinancial/

Or LinkedIn: https://www.linkedin.com/in/davidkinder

(I've turned my PMs off on the forum. Too many questions that should be asked in the open forum.)

 

[scagnt83]

It does effect life agents if you are a comparing a IUL for example to a over funded 401K. A lot of my clients have stopped over funding their 401k and putting it into Min death max funded IUL. I think those days are over.

If you are currently recommending that people do anything with their 401k then you are already acting as a Fiduciary and also would be required to have a Securities License.

If you tell a person "fund this IUL instead of increasing your 401k contributions" then you are required to have a Series 65/66 for that. The new regs change nothing when it comes to that.


What you ARE allowed to do right now without a Securities License, is to EDUCATE the prospect on the features of each product. They can then freely decide to choose your product over the alternative. But the moment you tell them "you should do this", you have crossed the line.

Nothing about that has changed. It was just reinforced.

 

[SamIam]

If you are currently recommending that people do anything with their 401k then you are already acting as a Fiduciary and also would be required to have a Securities License.

If you tell a person "fund this IUL instead of increasing your 401k contributions" then you are required to have a Series 65/66 for that. The new regs change nothing when it comes to that.


What you ARE allowed to do right now without a Securities License, is to EDUCATE the prospect on the features of each product. They can then freely decide to choose your product over the alternative. But the moment you tell them "you should do this", you have crossed the line.

Nothing about that has changed. It was just reinforced.

I agree with you and disagree with you. I never tell them to not to over fund but I do educate the benefits and downside of funding a Index IUL compared to over-funding a 401K. I also make then sign a disclosure stating that I did not tell them to stop funding their current investments.

Where I believe your wrong is you will not be able to educate the prospect on the features of each product. Life Insurance Yes. But you would not to be able to mention the positives or downside of a 401K, Roth etc if your not security licensed. You probably wont be able to mention the word 401k , Roth, 403b etc. from what I read from a article which I will have to find and post.

 

[scagnt83]

Where I believe your wrong is you will not be able to educate the prospect on the features of each product. Life Insurance Yes. But you would not to be able to mention the positives or downside of a 401K, Roth etc if your not security licensed. You probably wont be able to mention the word 401k , Roth, 403b etc. from what I read from a article which I will have to find and post.

The fact sheet provided by the DOL specifically states that there is an education exemption. But it has to be "general education". It cant be specific to the specific 401k Plan they are in.

You can say the the 401k Plan has expenses... but only a RR can say "you are paying xxx in expenses".
You can say that the 401k invests in mutual funds... but only a RR can say "these are the funds you are in and here is how they have/should perform".
You can say that the 401k returns will vary an be both positive and negative... but only a RR can say "you should expect x% over the next 10 years".

But your "education" also has to be non-bias, complete, factual, and void of specific recommendations or specifics about an individuals personal account.

 

[Tahoe Ray]

I also make then sign a disclosure stating that I did not tell them to stop funding their current investments.

You would likely be better off without this form than with it. It makes it look like you're trying to CYA...

I'm not an attorney, but I am at a Holiday Inn Express right now.