New Group Lobbies DOL on Fixed Indexed Annuities’ Treatment Under Fiduciary Rule

Annuity Consumer Choice Campaign wants fixed indexed annuities out of BICE

Annuity supporters are fighting to ensure that fixed indexed annuities get treated the same as other fixed annuities and not lumped in with securities products under the Department of Labor’s fiduciary rule. The newly formed group, the Fixed Annuity Consumer Choice Campaign, or FACC Campaign, is gathering signatures for a petition to be sent to Labor Secretary Alexander Acosta “urging him to delay implementation” of the fiduciary rule exemptions to July 1, 2019, and “fix the treatment of fixed indexed annuities.”

More than 1,800 signatures have been received so far, the group said.

As it stands now, fixed indexed annuities fall under the fiduciary rule’s best-interest contract exemption, or BICE.

State Fiduciary Rules Create a Regulatory ‘Mess’

Advisors “don’t know what their obligations are under state law” or what to do if they conflict with federal regulations,“That creates a unlevel playing field that inherently disfavors fixed annuity providers and products,” the group states on the website.

“Placing FIAs in BICE would have severe adverse repercussions for consumers by limiting choice in the IRA marketplace and would violate the spirit of the Harkin Amendment, which was adopted by Congress to distinguish regulatory treatment of FIAs from securities products,” the group’s website states.

The group’s chairman, Dwight Carter, president of Financial Security Associates, said in a statement that the new group is called “a campaign because we are singularly focused on protecting fixed annuities through both the regulatory and political process. We know it’s now or never for both our agents and our clients so we felt it was important to put together this very focused initiative.”

The National Association for Fixed Annuities, which sued Labor over its fiduciary rule, told the department in a comment letter that “the last-minute decision to unfairly and unnecessarily bifurcate the two general types of fixed annuities under two separate prohibited transactions exemptions — the best-interest contract exemption for fixed indexed annuities and PTE 84-24 for fixed rate annuities — will adversely affect retirement savers.”

The “essential change” to further the goals set forth in President Donald Trump’s Feb. 3 memo requesting that Labor review the fiduciary rule “is to return fixed indexed annuities to PTE 84-24, as was the case in the Department’s proposed rule issued in April 2015,” NAFA said.

“NAFA has maintained throughout the rule making process that both fixed rate and fixed indexed annuities should be subject to PTE 84-24 under the rule, and we have argued that the decision to switch fixed indexed annuities to the BICE reflected a fundamental misunderstanding by the Department regarding the features and similarities of these two types of fixed annuities.”


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Top 10 reasons to sell fixed annuities

Here are 10 reasons to consider a fixed annuity:

  1. Competitive interest rates. Annuities offer the flexibility of several interest rate guarantee options. Your clients can lock in the initial interest rate guarantee that works best for them.
  2. Tax-deferred growth. While money remains in the annuity, the principal earns interest and the earnings earn interest.
  3. No up-front sales charges or administrative fees. Once the contract is issued, 100% of your clients’ money will begin earning interest.
  4. Protection from market volatility. Fixed annuities have no market participation.
  5. Guaranteed death benefit. Upon the death of the owner, the annuity value is paid directly to the beneficiary, without any withdrawal charges or market value adjustment (if applicable), generally avoiding the probate process.
  6. Access to funds. Most fixed annuities allow for penalty-free withdrawals up to a specific amount and there are multiple withdrawal charge waivers that can be used under certain defined circumstances.
  7. Systematic withdrawals of interest. Clients can receive payments monthly, quarterly, semiannual or annually.
  8. Guaranteed income for life payout option. with the annuitization option, electing the lifetime payout option will transform the contract balance into a guaranteed income stream for life.
  9. Diversification. A tax-deferred fixed annuity can serve as a conservative addition to any retirement portfolio.
  10. Extra help to grow your business—marketing and sales support. ISN can provide comprehensive sales training including materials to both agents and bank customers. An annuity is the only financial product available that can guarantee income payments the contract owner won’t outlive.

Call ISN Network @ 1-800-338-1892 x 1

for any information on annuities.

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DOL Requests 18 Month Extension

Extension requested for BICE, two other PTEs to July 1, 2019

The Labor Department is proposing to extend the January applicability date of its fiduciary rule by 18 months.

In a filing with the court in the case being brought against Labor by Thrivent Financial for Lutherans, Labor Secretary R. Alexander Acosta told the court that on Wednesday, Labor submitted to the Office of Management and Budget proposed amendments to three exemptions: best-interest contract exemption; class exemption for principal transactions in certain assets between investment advice fiduciaries and employee benefit plans and IRAs; Prohibited Transaction Exemption 84-24 for certain transactions involving insurance agents and brokers, pension consultants, insurance companies, and investment company principal underwriters.

The proposed amendments extend the transition period and delay of applicability from Jan. 1, 2018, to July 1, 2019.

Notification of Labor’s OMB submission becomes publicly available the morning after submission.

Micah Hauptman, financial services counsel at the Consumer Federation of America — a staunch advocate of Labor’s fiduciary rule — told ThinkAdvisor on Wednesday that while specifics of the 18-month delay proposal have yet to be released, as CFA “made clear” in its Monday comment letter in responde to Labor’s request for information, “retirement savers need and deserve the full protections of the rule on Jan. 1.”

On that date, the Federation says, “the full protections” of BICE, the principal transactions exemption and amendments to PTE 84-24 are currently scheduled to be implemented.

“Without complete implementation of these prohibited transaction exemptions (PTEs), the full protections and benefits of the fiduciary rule won’t be realized, and retirement savers will continue to suffer the harmful consequences of conflicted advice,” the consumer group wrote.

“Unfortunately, by posing the question about whether there should be a further delay, the department is creating unnecessary uncertainty and confusion in the market. More concerning, it is creating a self-fulfilling prophecy: Firms, in anticipation that a delay will be granted, are likely to stall their compliance efforts, which the department is then likely to point to as the justification to delay.”

Investors, the group argued, “will suffer the consequences.”

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Prudential Restructures


Published 07/24/2017 – by Brian Anderson

In the latest restructuring move involving major life and annuity carriers, Prudential Financial unveiled a new organizational structure on July 20 intended to extend its customer reach and facilitate pathways to new markets.

In announcing the changes, the Newark, N.J.-based company said the new structure better reflects its strategic focus on leveraging its mix of businesses and its digital and customer engagement capabilities to expand its value proposition for the benefit of customers and stakeholders.

“Our strategy, enabled by our culture of teamwork and collaboration, sets us on a path to serve a broadening range of customers as the leading provider of integrated financial wellness solutions. It does so in a way that benefits from and contributes to our success as a global investment manager,” said John Strangfeld, chairman and CEO of Prudential.

“Prudential has always operated with a ‘customer first’ philosophy,” said Stephen Pelletier, executive vice president and chief operating officer of Prudential’s U.S. businesses. “To further improve outcomes for our customers, we have formalized an organizational structure that allows for greater agility and integration in how we engage, serve and deepen relationships with our customers throughout their lifetimes.”

Under the new structure, which will become effective in the fourth quarter of 2017, the company’s five U.S. businesses will be aligned under three groups oriented to the needs of specific customers. Each group will have a leader focused on understanding customer needs, experiences and expectations, and applying that understanding to capture growth opportunities within and across businesses.

  • Lori FouchéIndividual Solutions will comprise Annuities and Individual Life Insurance, and be led by Lori Fouché, who in 2015 became president of Prucential Annuities. Fouché joined Prudential in 2013 and became the CEO for Prudential Group Insurance, which produces and distributes group life, disability, voluntary and corporate and trust-owned life insurance. Before joining Prudential, Fouché served as president and CEO of Fireman’s Fund Insurance company.
  • Kent Sluyter, who currently oversees Individual Life Insurance, will become president of Annuities.
  • Caroline Feeney, who currently leads Prudential Advisors, will become president of Individual Life Insurance, which includes Prudential Advisors.
  • Salene Hitchcock-Gear, currently chief operating officer of Prudential Advisors, will become president of Prudential Advisors and report to Feeney.
  • Workplace Solutions will comprise Retirement and Group Insurance, and be led by Andy Sullivan, who currently leads Group Insurance.
  • Phil Waldeck will continue to lead Retirement, and Jamie Kalamarides, currently head of Full Service Solutions within Retirement, will become president of Group Insurance.
  • Investment Management will continue to comprise all PGIM businesses, including PGIM Investments, and will continue to be led by David Hunt, president and CEO of PGIM.

According to Pelletier, the structure maintains foundational strengths, builds on new and existing capabilities, and anticipates the emerging needs of customers within a changing market and an evolving workplace. “It provides clear leadership and accountability, and facilitates resource allocation to capitalize on growth opportunities, while continuing to provide transparency at the business segment level,” he said.

The announcement comes in the wake of other recent restructuring moves and rumors by major carriers as they deal with the prolonged low interest rate environment, SIFI designations and other regulatory challenges:

  • MetLife’s recent move to spin off its U.S. retail individual life and annuity business to newly formed Brighthouse Financial.
  • Toronto-based Manulife Financial is reportedly exploringan IPO or spin off its John Hancock unit, according to a July 13 Wall Street Journalarticle.
  • AXA announcedback on May 10 its intention to IPO its U.S. operations, intending to create to create a leading U.S. life insurance, annuity and asset management company.

About Prudential: Prudential Financial, Inc. (NYSE: PRU), a financial services leader with more than $1 trillion of assets under management as of June 30, 2017, has operations in the United States, Asia, Europe and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit


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A Case Study in Long Term Care

Long-term care and the cost of care can be overwhelming for most. In the past, traditional stand-alone LTC policies were the only way to insure long-term care expenses. These days, there are more ways to obtain this valuable coverage – including LTC riders on Life Insurance policies.

Underwriting long-term care risks can be very different from underwriting for life insurance. LTCi underwriting takes into account medical impairments that impact ability to perform daily living activities. Whereas, life underwriting is more concerned about impairments that affect mortality, or life expectancy. In some cases, your client may be eligible for life insurance at a favorable rate class, but may be rated or declined for long term care.

This recent case study shows how different underwriting mortality vs. morbidity can be and how using life insurance with a rider can be effective over traditional LTCi:

  • 62 year old female
  • Seeking $1 million of UL coverage with a Long Term Care rider
  • Non smoker; normal build
  • Hypothyroidism diagnosed in 1980; well controlled on medication
  • Was seen once by a chiropractor for back pain with improvement
  • Diagnosed with scoliosis
  • Final underwriting decision: Super Preferred for life coverage; Standard for the LTC rider due to scoliosis and back pain history

Non-traditional long-term care insurance and chronic illness riders are the perfect solution for those impairments that would be declined for traditional LTC riders.

These alternative riders are automatically available on eligible permanent products with little to no additional underwriting.

Whatever the case may be, there is a product we can pivot to, to cover long-term care needs. Contact ISN @ 800-338-1892.  We are here to help you sort through the different options and pre-qualify your client for this much-needed coverage.


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Newlyweds Need to Think About Taxes

Spring showers bring summer flowers and weddings typically aren’t far behind. Newlyweds have a lot to think about and taxes might not be on the list. However, there is good reason for a new couple to consider how the nuptials may affect their tax situation.

The IRS has some tips to help in the planning:

Report changes in:

1. Name. When a name changes through marriage, it is important to report that change to the Social Security Administration. The name on a person’s tax return must match what is on file at SSA. If it doesn’t, it could delay any refund. To update information, file Form SS-5, Application for a Social Security Card. It is available on, by calling 800-772-1213 or at a local SSA office.

2. Address. If marriage means a change of address, the IRS and U.S. Postal Service need to know. To do that, send the IRS Form 8822, Change of Address. Notify the postal service to forward mail by going online at or at a local post office.

Consider changing withholding
Newly married couples must give their employers a new Form W-4, Employee’s Withholding Allowance Certificate, within 10 days. If both spouses work, they may move into a higher tax bracket or be affected by the Additional Medicare Tax. Use the IRS Withholding Calculator at to help complete a new Form W-4. See Publication 505, Tax Withholding and Estimated Tax, for more information.

Decide on a new filling status
Married people can choose to file their federal income taxes jointly or separately each year. While filing jointly is usually more beneficial, it’s best to figure the tax both ways to find out which works best. Remember, if a couple is married as of Dec. 31, the law says they’re married for the whole year for tax purposes.

Select the right tax form
Choosing the right income tax form can help save money. Newly married taxpayers may find they now have enough deductions to itemize them on their tax returns. Newlyweds can claim itemized deductions on Form 1040, but not on Form 1040A or Form 1040EZ.


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Stretch it Out

One of the primary benefits of an Individual Retirement Account (IRA) is the ability to defer taxes. The longer the deferral the faster the IRA will grow. The idea of “stretching” your IRA is c concept that has been talked about and utilized for many years. The “Stretch” Concept is a wealth transfer technique that may allow the benefits of an IRA to stretch across several generations.

The IRA is the governments way of allowing us to save for retirement. But, the IRS still wants its fair share. As we know, they require us to start taking distributions at age 70 1/2. Because all distributions are taxed and may cause the IRA owner to go into a higher tax bracket, most IRA owners take the least amount out of their IRA when forced to take distributions. This is called the Required Minimum Distribution (RMD).

When we refer to the “Stretch”, we mean only the RMD is taken each year by the account owner and their designated beneficiaries thereby extending the period for maximum deferral. When someone is only taking RMD’s, it is most often a situation when the person has other sources for current income so they do not need the RMD’s for living expenses.

Here is how it works- each situation is different and should reflect variables such as marital status, age of spouse, number of children and financial status. But in general the IRA owner should:

  • Name the spouse as primary beneficiary
  • Name children/ grandchildren as contingent beneficiaries
  • Ultimately divide the account into separate accounts before the IRA reaches the contingent beneficiaries.

If the IRA is divided into separate accounts for each beneficiary by December 31 of the year after the IRA owner’s death, each beneficiary can use his life expectancy to compute the new RMD’s. Using the younger ages of the beneficiaries means smaller distributions and a “stretching” of the asset for a much longer time.

A “stretch” IRA can provide many benefits for a beneficiary. It may provide lifetime income to the beneficiaries. By withdrawing smaller amounts over a longer period of time, there is a great potential to pay lower taxes. In addition, the continued tax dereffed growth of the account can increase the wealth passed to heirs.



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