Category: Market News

Financial Advisers Get Some Answers on DOL Fiduciary Rule

Financial Advisers Get Some Answers on DOL Fiduciary Rule


Recap: FAQs and clarification on the DOL Fiduciary from the DOL

Q1. Is every communication with a financial adviser about retirement accounts a fiduciary recommendation?


Q2. Do fiduciary investment recommendations include the communications a financial services company has with its own employees in their capacity as employees regarding their job responsibilities merely because the employees may in the ordinary course of their employment provide fiduciary investment advice to plans or IRAs

and so on…



Recap: Rise in acceptance of robo services creates challenge for financial services industry: strike a balance between humans and robots


  • Seven in 10 consumers around the world would welcome robo-advisory services
  • Consumers are now open to robo-advice to help determine which bank account to open (71 percent), which insurance coverage to purchase (74 percent), and how to plan for retirement (68 percent).
  • Nearly one-third would switch to Google, Amazon or Facebook for banking services (31 percent), insurance services (29 percent) and financial advisory services (38 percent).
  • Nearly the same percentage of global consumers would also consider switching to a supermarket or retailer for their banking (31 percent) and insurance (30 percent) services.
  • The survey found nearly two-thirds of consumers are interested in personalized insurance (64 percent) and banking (63 percent) advice based on their individual circumstances, and when asked about wealth management advice, that increases to 73 percent.

The Survey:

  • Accenture surveyed 32,715 respondents across 18 countries and regions including the US, Canada, Benelux, France, Germany, Ireland, Italy, Nordic countries, Spain, the United Kingdom, Brazil, Chile Australia, Hong Kong, Indonesia, Japan, Singapore and Thailand. Respondents were consumers of banking, insurance and wealth management services; they were required to have a bank account and an insurance policy and were asked if they used an Independent Financial Advisor, Wealth Manager or Asset Manager, with total financial advisory responses totaling 9,987. Respondents covered multiple generations and income levels. The survey was conducted during May and June 2016.

WSJ: China’s Risky Insurance

China’s Risky Insurance

Recap: Insurance conglomerates are using funds to empire-build and gain influence. Regulators cracked down on insurance companies selling high-return policies that funded risky investments

Don’t forget: The Anbang Insurance Group purchased the Waldorf Astoria in 2014 (it’s par for insurance companies to purchase real estate though typically not landmark hotels) and converted the hotel into condos (not normal)

Insurance in China:

  • Chinese officials spent the past year scolding insurers for taking on too much risk, but the insurers were making money and had enough clout to stave off rule changes
  • Finance conglomerate Baoneng Group used its insurance arm to finance a hostile bid for China Vanke, one of the country’s biggest and best-run developers.
  • The authorities banned Evergrande Life from investing in stocks and suspended Baoneng’s sales of universal life policies
  • A raft of new rules followed, including restrictions on ownership stakes in insurers and limits on risky investments.

VA Sales Drop Seen Leveling Off in 2019

Cerulli Associates report sales of variable annuities are expected to drop by 10 percent through 2018 before leveling off in 2019

U.S. Annuities and Insurance 2016: Adapting to the Fiduciary Reality

Recap: The decline in variable annuity sales is attributable almost entirely to the Department of Labor fiduciary rule.  Variable annuities with high upfront commissions are likely to be pruned from broker/dealer shelves as insurers make way for fee-based options and where compensation is paid on an ongoing basis instead of a one-time upfront commission


  • Variable annuity sales are trending toward a drop of more than 20 percent in 2016 compared with 2015
  • In the first nine months of 2016, variable annuity sales dropped 22 percent to $79.4 billion compared with the year ago period, according to LIMRA Secure Retirement Institute’s third quarter U.S. Individual Annuity Sales Survey
  • Sales of fixed indexed annuities have fared much better. They rose 22 percent to $46.9 billion in the first three quarters of 2016 compared with the year-ago period, LIMRA also reported

Americans Are Putting Billions More Than Usual in Their 401(k)s

Americans Are Putting Billions More Than Usual in Their 401(k)s

Recap:  Automatic enrollment + auto-escalation.  Fees on 401(k) plans are falling.


  • The typical baby boomer, whose generation is just starting to retire, has a median of $147,000 in all of his retirement accounts, according to the Transamerica Center for Retirement Studies
  • 1 in 3 private sector workers don’t even haveretirement plan through their job
  • On average, workers in 2015 put 6.8 percent of their salaries into 401(k) and profit-sharing plans, according to a recent survey of more than 600 plans. That’s up from 6.2 percent in 2010, the Plan Sponsor Council of America found.
  • About $7 trillion is already invested in 401(k) and other defined contribution plans, according to the Investment Company Institute.
  • Employers pitched in 4.7 percent of payroll in 2015, the same as in 2013 and 2014.
  • In such plans, 89 percent of workers are making contributions, the survey finds, while 75 percent make 401(k) contributions under plans without auto-enrollment.
  • Auto-enrolled employees save more, 7.2 percent of their salaries vs. 6.3 percent for those who weren’t auto-enrolled
  • Less than a quarter of plans auto-escalate all participants, while 16 percent boost contributions only for workers who are deemed to be not saving enough
  •  The total cost of running a 401(k) plan is down 17 percent since 2009, to 0.39 percent of plan assets in 2014. The cost of the mutual funds inside 401(k)s has dropped even faster, by 28 percent to an annual expense ratio of 0.53 percent in 2015


Voya 2017 Forecast – A New Path: The Growth and Reflation Trade

Voya 2017 Global Forecast

Recap: Pro-growth fiscal policies, business-friendly policies will support higher growth, increased pricing power and a boon to global businesses. 2017 risks: Trump execution risk, trade war, EU instability, inflation overshoot, runaway rise of US dollar

  • A surprise outcome in the U.S. elections ushered in a new path forward, and markets worldwide celebrated the promise of pro-growth economic policies with rising asset prices and rising bond yields
  • In effect, the markets took the reins from the central banks, clarifying the likely path toward rate normalization — reflation — and away from unconventional monetary stimulus
  • The prospect of business-friendly policies also supported a corporate earnings turnaround — potentially higher growth, increased pricing power and higher after-tax net income — a boon to global business
  • The paradigm shift will provide unexpected returns — and risks — that may create both positive and negative extremes, making a case for broad global diversification