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Some Annuities Lose Fiduciary Rule Exemption

Many insurance brokers and agents who were counting on fixed-indexed annuities being exempted from the Best Interest Contract Exemption (BICE) provision in the new fiduciarybill have received a rude shock. The final language of the bill that was released this month places fixed-indexed products in the same category as variable annuities (VAs), which constitutes a major change from the preliminary proposal. This may lead to similar changes in the fixed indexed annuity market as what is predicted for the VA market and leaves the VA industry without a fallback plan that it thought it would be able to count on to lessen the impact of the bill.

Unpleasant Surprise

Sheryl Moore, president and CEO of Moore Market Intelligence, said: “Indexed annuities were variable-annuity carriers' Plan B. Now, they're having to come up with Plan C.” Before the Department of Labor (DOL) issued the new rule in its final form, indexed and variable annuity contracts were exempted under a statute known as Prohibited Transaction Exemption (PTE) 84-24. This permitted the sale of indexed and variable products to retirement plan customers under a commissionable arrangement. But this exemption is now history for these products and they will both have to be sold under the Best Interest Contract Exemption provision that is laid out in the new bill. (For more, see: How Fixed Index Annuities Yield Retirement Income.)
Many critics feel strongly that this exemption will create undue liability for brokers and agents who sell them and lead to frivolous lawsuits regarding whether they acted in the client’s unconditional best interests. Chris Joline, one of the principals at PwC, states: “The final rule has made it very clear fixed-indexed annuities are now under the BICE and I know many of the annuity carriers were counting on that being 84-24, business-as-usual. What we initially thought was many VA carriers would go into fixed indexed annuities because it would be simpler to handle those, and they have many of the same characteristics. Now, we don't see that as being as likely.”

Needless to say, this turn of events has been quite a blow to insurance carriers who specialize in the indexed annuity market. But not everyone is surprised at the bill’s final ruling. The president and CEO of the Insured Retirement Institute said that conversations that the trade organization had with DOL officials gave them a fairly clear indication that only relatively simple annuity products such as fixed and immediate annuities would retain their exemption. (For more, see:What the Fiduciary Proposal Means for Annuities.)

Consolation?

But annuity producers do have one crumb of consolation, in that straight fixed annuity products did retain this exemption. Although the industry had expected indexed products to be lumped in with fixed products instead of their variable counterparts, they do still have one major avenue left untouched. The final language in the bill states that it made this choice because indexed annuities are “often quite complex and subject to significant conflicts of interest at the point of sale [and] should be sold under the more stringent conditions of the Best Interest Contract Exemption.”
Another crumb could be that the BICE provisions may not be quite as burdensome as was initially predicted, as the BICE agreement will not need to be signed until the point of sale under the final provisions of the bill. The total number of disclosures have also been reduced from what they were under the proposed bill, and the exemption has also been clarified so that there is no bias against presenting and selling proprietary products. Equally important is the fact that the time frame for implementing these changes has been stretched out to a year. This could all mean that sales of variable contracts may not drop as much as they were projected to. (For more, see: What the DoL’s Fiduciary Policy Means for Advisors.)
Laura Bazer, vice president and senior credit officer at Moody’s rating agency, stated: “I would say variable annuity sales will be impacted, but possibly not as much as people thought. But we'll have to see, and it will depend on the specifics of the company selling the product.” One possible change that may come from the bill is a movement towards fee-based annuity contracts in lieu of those that pay a commission. This type of contract would be exempt from the BICE requirements and may be a viable alternative for retirement plan advisors who want to stay compliant and still receive adequate compensation for their services.

The Bottom Line

The new fiduciary bill that was issued this week will have a substantial impact on the retirement planning industry even if the sales of variable and indexed annuity products remain unaffected. The BICE requirements and other provisions in this bill will likely lead to major changes in how annuity products are marketed, sold and managed by advisors of all stripes. (For more, see: Advising FAs: Explaining Annuities to a Client.)
investopedia - the source
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Don't Focus Too Much on ETF Fees



Fees matter when choosing an investment, but it’s not the only factor to consider. That’s particularly true with exchanged-traded funds or ETFs, which already are cheaper than many other funds on the market. Consider this: according to the Wall Street Journal ETFs on average have an expense ratio of 0.44%. That compares to the average index fund’s expense ratio of 0.74%. That doesn’t mean every ETF is cheap, but the majority of the most mainstream ones tend to be. (Read more, here: Minimizing ETF Fees.)
Nonetheless, many investors choose to harp on the fees, spending hours upon hours poring over the prospectus, looking for hidden or extra fees when deciding which ETF to invest in. They figure every penny that goes to fees and expenses means less money being invested. And while due diligence is the cornerstone of any sound investment decision, that same discipline often isn’t applied to the makeup of the ETF. After all, it's tracking an index anyway, so how much attention really needs to go to the underlying investments, is often the line of thinking. That could increase as more 401k plans include ETFs. Studies showemployees give more thought to planning a vacation than choosing their 401k investments.
It turns out the investments matter more than investors may think. Not paying attention to the underlying investment can throw a portfolio off track, which means it’s not working as planned. From having the proper asset allocation to preventing redundancy, here’s a look at why fees shouldn’t be the only factor to consider when choosing which an ETF to invest in.

Focus Only On Fees Limits Choices

ETFs have exploded in popularity, appealing to risk-averse investors who don’t want to pay a lot for their investments. That means investors have a lot of choice regarding the makeup of the ETFs, giving them the ability to create a diversified portfolio. (Read more, here: 6 Popular ETF Types For Your Portfolio.) But for extremely price-conscious investors, focusing on the fees will limit their choices and thus their diversification and potentially their returns. Investors who don’t take the time to look at what the stocks are in the ETF could end up with ones that are industries that are facing negative headwinds like oil stocks or funds with high turnover that means more of a tax hit. Sure there may be cheap oil-focused ETFs, but the money you save in fees won’t mean much if oil prices continue to sink. Some ETFs are pricier for a reason. There are exotic ones that are going to cost more but give risk-seeking investors access to different types of investments.

Redundancy Costs Investors

Investors can’t put all their eggs in one basket, even when investing in ETFs. They have to have diversification, which means investments across different industries and regions. It also means a mixture of both safe and risky bets. For the portfolio to work, it has to match your investment horizon and risk tolerance. ETFs can play a role in achieving that, but that’s only if you take the time to look at the investments. A mid-cap focused ETF and global-focused ETF may seem different, but there could be overlap in the investments. Too much overlap means less diversification, which spells trouble. Because the investor didn’t look at the makeup of the ETF before investing the asset allocation could shift too much, impacting the risk tolerance and thus your overall investment plan. (Read more, here: How To Pick The Best ETF.)

The Bottom Line

ETFs are a low-cost way for investors to create a diversified portfolio. Paying attention to fees matters, but it’s not everything. Investors have to be mindful of their investment choices making sure it matches with their risk tolerance and investment goals before choosing which ETF to invest in.
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The Big Picture: This vast vault of gold under the Bank of England should weather the credit crunch


You are looking at the room most likely to weather the credit crunch, a vast vault filled with the final word in financial security: gold. 
As stocks and shares tumble, house prices crash and previously unassailable institutions crumble into dust, the sight of several thousand 28lb bars of 24-carat gold stored in the Bank of England's massive underground vaults is hugely reassuring. 
For as the world wakes up to the fact that securities and dodgy loans are turning out to be as solid as wet cardboard, good old-fashioned gold has come back into fashion as never before.


Indeed, less than a decade ago, the noble metal was trading at a mere $275 an ounce. Today, an ounce of gold fetches $787.80 (£460), making each of these bars worth around £200,000, or as much as a top-of-the-range Ferrari (and, before long, more than the average London house). 
In fact, there are around 15,000 bars in this picture alone  -  that's about 210 tonnes of pure gold, with a value of nearly £3 billion. And there's plenty more out of view. 
In fact, what you see here is just one-twentieth of the gold stored under the Old Lady of Threadneedle Street, as the Bank of England's City of London headquarters is affectionately known. 
In all, some £73billion of gold  -  that's 4,600 tonnes of the stuff  -  is stored in concrete-lined vaults beneath the busy streets of central London. It never oxidises or tarnishes (so it doesn't need to be covered), although it does need the odd dust  -  by a cleaner who has been carefully vetted, no doubt. 
Sadly, not all the gold beneath the Bank of England is ours. 
It is a long time since the British currency was pegged to the value of gold (Britain left the Gold Standard in 1931), but we have always kept some as a reserve of last resort. Sadly, we haven't always bought and sold it wisely. 
In May 1999, for example, the then-Chancellor, Gordon Brown, decided to sell 415 tonnes, or 60 per cent of the UK's total reserves. 
Unfortunately, this sale took place at a time when gold prices reached historic lows. Had we held on to this gold, critics say, the Exchequer would now be £2billion better off. 
In fact, most of the gold stored here is held by the Bank of England on behalf of other depositors, notably the central banks of various foreign governments who might not have access to such a secure cellar. The bars themselves are not identical. 
The quality of the actual metal doesn't vary, but the slightly different shapes and marks reveal that it comes from various sources.
Security for the world's second-largest gold store (the largest, by a whisker, is the Federal Reserve bank vault in New York) is, predictably, rather tight. 
The vaults are huge and include three disused wells. In fact, the floorspace is actually larger than that of the City's tallest building, Tower 42. Keys three-feet long are needed to open the gigantic vault doors. 
They look ceremonial, like something used for a state occasion, but these keys are in fact entirely functional. 
As they are inserted into the locks, the person attempting entry also has to speak a password into a microphone before the vaults are opened. 
The Bank is, understandably, rather secretive about the precise details of the vaults. But the walls must be literally bombproof as they were used by bank staff as air raid shelters during World War II. The posters on the wall, depicting sunny climes, luxury cruises and happier times, have been preserved from that era. 
As the world loses its faith in most investments, gold provides a primeval sense of security. 
Of course, beyond being pretty (and its uses in electronic circuitry) the intrinsic value of gold is mostly symbolic, too.
But what would you rather have in your hands right now: a fistful of share certificates, or one of those bars?


the source - dailymail
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Tikal excursion is worth effort, cost

The ruins of Tikal, a Unesco World Heritage site deep in the jungle of Guatemala, are a lifetime checklist item for many travelers. But the location is remote, and for cruise travelers arriving at Puerto Quetzal on the country's Pacific coast, it takes a two-and-a-half-hour trip inland by bus and plane to get there.

The cost is steep, as well. My Tikal Expedition by Air tour, offered on a recent 14-day cruise aboard the Azamara Journey, was priced at $699 per person.

So what's so wonderful about Tikal that makes it worth the trouble and expense of getting there?

The Mayan civilization thrived between 800 B.C. and 1000 on the site, which was a commercial capital of sorts. After building temples as tall as 20 stories in the ninth century the Mayan population declined, and the site was abandoned to the rain forest, only to be rediscovered in the 1850s.

the source - travelweekly
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Survey finds surge in peer-to-peer home rentals, ride-hailing

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Star Wars attractions opening at Disney World

ORLANDO, Fla. (AP) — The Force is awakening a little early at Walt Disney World.

The Florida-based theme park resort is unveiling Friday new Star Wars entertainment two weeks ahead of the much-anticipated release of the movie, "Star Wars: The Force Awakens."

Some of the Star Wars attractions opened earlier this week at the resort's Disney's Hollywood Studios theme park.

Those include a courtyard filled with all-things Star Wars, a video game center, a movie theater showing abridged versions of the Star Wars movies and a motion simulator showing Star Wars locales and characters.

Starting next year, visitors also will get to see a Star Wars-themed firework show.

Both Disney World in Florida and Disneyland in California are planning Star Wars-themed lands in the near future.
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Slate of new hotels, tours, air charters on tap in Cuba for 2016

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