DOL Fiduciary Duty and the Important Business Implications How to do business in an uncertain post Fiduciary Duty world MLINY091416098

Outline The Rule How it Works What’s not under the rule Getting paid for Fiduciary Advice The Exemptions, and The Implications Best Practices…a start…

The Rule Originally proposed in October 2010 as an update to the definition of the term “Fiduciary” DOL decided not to pursue

The Rule In February 2015 the Executive Branch called publicly for a new proposal SEC and FINRA opted to study before proceeding DOL agreed to take immediate action releasing a proposal in April 2015 DOL Authority Employee Retirement Income Security Act of 1974

How it Works DOL’s “Conflict of Interest Rule” updates the ERISA framework for “fiduciary advice”: Covered Plan Part 4 of Title 1 of ERISA (Qualified Plans), and IRAs Covered Advice Advice to invest in, or distribute from, a covered plan Directed to a specific recipient or pursuant to an agreement Conflicted Advice Advice for which the provider receives Differential Compensation (compensation that varies based upon the advice provided) Prohibited Transaction Advices that fits the criteria above, and Lacks an exclusion, exception or, exemption

What’s not under the rule Exclusions Marketing of plan platforms Retirement plan platform wholesaling Selection and Monitoring of investment alternatives based on objective criteria Assisting a plan fiduciary with fund selections General Communications Newsletters and generic communications that are generally “marketing” efforts Education Carve Out

What’s not “under” the rule Exceptions Advice provided to a plan participant by an employee of a Plan Sponsor Swap transactions Advice to a fiduciary with financial expertise Bank, RIA, Insurance Company or over $50m in Assets Under Management

Getting paid for “Fiduciary Advice” The Exemptions Best Interest Contract Exemption (BICE) Prohibited Transaction Exemption (PTE) 84-24

The Exemptions Best Interest Contract Exemption Receive compensation but; Advisor and advice is still subject to a Fiduciary standard Requires a Financial Institution Bank, B/D, RIA or, Insurance Company NOT an independent distributor Requires an executed contract “Financial Institution” and Client

The Exemptions PTE 84-24 Receive compensation but; Advisor and advice is still subject to a Fiduciary standard Disclosure requirements Advisor Based exemption

Exemptions: The Implications Fiduciary Standard: Advisor must put a client’s best interest ahead of their own. Fiduciary Advice: Directed to a specific recipient Based on recipient’s particular individual investment needs Advisor receives no more than reasonable compensation, and Includes disclosing information about any of the advisor’s conflicts of interest

Disclosures This material was not intended or written for use and cannot be used by any taxpayer for the purpose of avoiding any IRS penalty. It was written to support the marketing of the transactions or topics it addresses. Anyone interested in these transactions or topics should seek advice based on their particular circumstances from independent professional advisors. Insurance policies and/or associated riders and features may not be available in all states. Insurance products are issued by: John Hancock Life Insurance Company (U.S.A.), Boston, MA 02210 (not licensed in New York) and John Hancock Life Insurance Company of New York, Valhalla, NY 10595. MLINY091416098 ©2016. John Hancock. All rights reserved.