Unchartered waters: Why this IMO is seeking FI status under DOL rule
August 15, 2016 by Warren S. Hersch
Since the Department of Labor handed down its fiduciary rule, the industry has been abuzz about the outlook for insurance-only producers who sell fixed indexed annuities through independent marketing organizations. The reason: The rule doesn’t include IMOs in its definition of a “financial institution.”
The FI categorization has traditionally been reserved for broker-dealers, insurers and registered investment advisors. What’s more, the DOL stipulates that only a FI can approve sales commissions under the fiduciary rule’s best interest contract exemption (BICE).
What are producers of FIAs, which are now subject to the BICE, to do? Well, they can work with an IMO that has secured from the DOL a special exemption to be classified as a financial institution under the BICE. That process is now underway.
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