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The rules have changed

The Department of Labor's fiduciary rule has arrived. Now that the dust is clearing, advisors can move forward with certainty on at least one front: The final rule acknowledges that both fee- and commission-based services can be in the client's best interest.

The following is a special guest blog from John Kennedy, Senior Vice President, Head of Retirement Solutions Distribution at Lincoln Financial Distributors.

As clients face increasing lifespans that magnify the impact of rising healthcare costs, inflation, taxes, and market risk, they may find even greater value in having a dependable source of income from an annuity to help them maintain their lifestyle in retirement.

So how can you navigate this changed regulatory landscape while ensuring your clients’ needs are met?

Make the case for choice

Every day, you give clients options to help empower them to make decisions. Sharing objective information on the implications of commissions and fees not only provides clients with greater flexibility, but ultimately offers them greater choice to determine how they want to plan for their future. Be their guide through this decision process as you’ve guided them through so many past decisions.

Follow the financial need

How can you tell when commissions or fees may be best for your clients? Clients who anticipate more frequent portfolio changes may benefit from a fee-based arrangement for consistent monitoring and oversight, allowing a flat rate or fixed percentage to keep costs down.

For clients with less need for ongoing portfolio changes, where they receive advice primarily at the beginning of the process, commission-based arrangements may be more suitable. Commission-based advice may be particularly appropriate for long-term, buy-and-hold investments like annuities, which require advisers to invest time educating clients about product selection and how it will contribute to their retirement income planning objectives.

Build trust

This may be the first time in your career that clients are asking you about the term “fiduciary.” These questions, and the changes in the industry, provide a new opportunity for you to have open conversations with clients about your philosophy and practices. As you educate them on this new front of commissions versus fees, you will be empowering clients to make informed decisions and deepen a client-adviser relationship underscored by trust.

Take the long view

As consumer preferences and regulatory frameworks evolve, you have the opportunity to lead an open and transparent dialog about entering into a fee- and/or commission-based relationship to offer retirement income planning and other services. And having this conversation can be another way of acting in clients' best interests.

For more information on the value of advice in this new regulatory landscape, contact your Lincoln representative. And don’t forget to follow us on LinkedIn and Twitter for regular insights and tips on income planning conversations.


John Kennedy

John Kennedy is Head of Retirement Solutions Distribution sales for Lincoln Financial Distributors, Inc. (LFD), the wholesaling distribution organization for Lincoln Financial Group. Kennedy is responsible for overseeing growth strategies for the distribution of Lincoln’s annuities and intermediary 401(k) businesses.

Prior to joining Lincoln Financial, Kennedy was National Sales Manager for MetLife Investors. His previous positions include Senior Vice President for AXA Distributors and various senior sales and marketing roles for PLANCO, a financial services subsidiary of The Hartford.

Kennedy received a bachelor’s degree in Business Administration from St. Joseph’s University in Philadelphia, PA.