Fiduciary Spurring Shakeup in Indexed Annuity Sales
April 26, 2017 by Barron's
Brokers may soon have to clear their indexed annuity sales through their broker-dealer in order to walk the fiduciary line, says InvestmentNews.
Firms are looking at whether to continue allowing sales of the products to be reported as “outside business activity,” the publication writes. Under that approach, brokers are paid commissions directly from an insurer or their go-between marketing partners.
“Now, though, the Department of Labor’s fiduciary rule is creating a dynamic whereby brokerage firms, to better monitor their brokers and control risk, are bringing those sales under their roof,” InvestmentNews writes.
“In my opinion, with the DOL rule, especially as it was initially rolled out, you’re going to see a lot more firms bring that under house,” Judson Forner, vice president of investment marketing at ValMark Securities, tells the publication.
B-Ds that make the change take a share of the commission, which hadn’t previously been the case. It’s possible that brokers will do better as well. A recent internal memo at related firms Sigma Financial and Parkland Securities, where the change was expected to be implemented, said that brokers would get indexed annuity payouts through their grid, according to InvestmentNews.
Their earnings typically won’t be seriously affected, and they could be greater in some cases, the memo stated.
