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Life Insurance Best Practices Framework Author Testifies about New Fiduciary Rules

Friday, August 28, 2015

Don Trone, author of LeaderMetrics and often referred to as the “Father of Fiduciary,” testified at a Department of Labor hearing on Thursday, August 13th, 2015. Trone told the DOL execs on the last day of Labor’s hearings that he opposed their plan to amend the definition of fiduciary under the Employee Retirement Income Security Act, and that DOL “cannot simply wave its regulatory wand and make every advisor a fiduciary.”

Advisors, he said, “need…additional training on fiduciary best practices before the person can judge wisely and objectively–which is what is required to serve in a client’s best interests.” The good news for life insurance advisors who work with and/or get referrals from fiduciaries is that the “Father of Fiduciary” has already help provide standards for life insurance. Trone lead a group of industry leaders gathered at West Point in April 2013 to finalize a Best Practices Standard for Life Insurance Stewardship. As Trone suggested to the DOL, there needs to be “a checklist” to lay out what practices a fiduciary will have to demonstrate to be compliant. The West Point draft of Best Practice Standards is just such a checklist of 6 steps designed to provide a universal decision making framework for the prudent selection and proper management of life insurance.

Fiduciaries need to be compliant with published rules, guidance and regulations and avoid sales practices which are specifically and clearly, forbidden by the chief regulatory body of the financial services industry, and cautioned against by the chief actuarial body of the life insurance industry and the OCC. “Unfortunately, there are organizations today that are deliberately interfering with training, and others that are making false and misleading statements about their experience, expertise or independence,” Trone said. “This interference is not coming from groups that oppose fiduciary standards, but rather from the very same organizations that are promoting themselves as ‘pro‐fiduciary’ leaders.”

Trone summarizes for Veralytic readers that “a fiduciary standard is a journey of 1,000 miles. A best interests principle is merely the first step. The rest of the journey is defined in terms of practices and the dimensions that provide the details to each practice.” Trone’s next Leadership Bootcamp will be September 22-24, contact for more information.

Veralytic helps support sections 4-6 of the Best Practice Standards’ duty to investigate costs and establish reasonable performance assumptions. Veralytic is the only patented, objective and rules-based research tool that goes beyond the overly-simplistic comparisons of illustrations of hypothetical policy values that can be considered “misleading” and “inappropriate” by both financial and insurance industry authorities. Veralytic’s independent research reports provide a facts-based solution that is both compliant with industry regulations and established case law.

Veralytic is simply the fastest, easiest, and most comprehensive and cost-effective way to independently verify to clients and their advisors whether or not the pricing and performance of existing or proposed life insurance is in their best interest.  Only Veralytic is accepted for independent client representation, endorsed by the New York Bankers Association (NYBA) and compliant with industry regulations and established case law.

Use the Veralytic Reports to determine the appropriateness of pricing, the reasonableness of performance expectations for invested assets underlying policy cash values, and overall suitability for your (client’s) policies based on the 5 factors of suitability.  Get up to 3 Veralytic research reports under our NO-Risk trial subscription.

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