Your DOL Fiduciary Rule Questions Answered

May 25, 2017 - The Department of Labor announced there will be no delay in the June 9 applicability date of the Fiduciary Rule. Additionally, the DOL clarified the Rule will apply beginning at 11:59 p.m. on June 9.   Please read below for more information. 


How does the rule affect annuity sales?

June 10 through December 31, 2017: The expanded fiduciary definition is in effect for all business involving a deposit to or a withdrawal from an IRA, ERISA Plan or 401 Plan. 

Producers must use an Exemption to receive a commission for new sales and additional purchase payments to existing contracts.

  • All producers can use the 84-24 Exemption for traditional fixed, fixed-indexed and variable annuity business. 
  • Producers who have a Financial Institution in their hierarchy that has signed our DOL Fiduciary Rule Agreement can use the BICE for traditional fixed, fixed-indexed and variable annuity business. 

Beginning January 1, 2018: Full compliance with the final fiduciary rule is required for all business involving a deposit to or a withdrawal from an IRA, ERISA Plan or 401 Plan.  All transitional accommodations go away.

  • Producers must use the BICE to receive a commission for fixed-indexed and variable annuity business. 
  • Producers can use either the 84-24 Exemption or BICE to receive a commission for traditional fixed annuity business.

    How do I use the 84-24 exemption?

    To use the 84-24 exemption from June 10 through December 31, 2017, you must:

    • Comply with the impartial conduct standards, which require producers to act in the client’s best interest, receive reasonable compensation and avoid misrepresentations; 
    • Prior to the transaction, provide a written disclosure complying with PTE 84-24; and
    • Receive a written acknowledgment of the disclosure and approval of the transaction from the IRA owner or independent plan fiduciary.
    We have sample 84-24 disclosures available on our agent websites. You do not have to use the Great American versions, but you are responsible for complying with the requirement. You do not need to submit the disclosure to us as part of the new business process. 

    How do I use the BICE?

    To use the BICE from June 10 through December 31, 2017, you must:

    • Have a Financial Institution in your hierarchy that has signed our DOL Fiduciary Rule Agreement; and
    • Comply with the impartial conduct standards pursuant to the policies and procedures established by the Financial Institution in your hierarchy.

    Beginning January 1, 2018, the BICE will require a signed agreement with the client and other obligations, in addition to the above requirements.

    The Financial Institution is responsible for working with producers to ensure BICE requirements are met. There are no additional requirements from Great American.

    Will business be rejected if I don't have a Financial Institution in my hierarchy?


    • June 10 through December 31, 2017: We will continue to accept IRA, ERISA Plan and 401 Plan fixed-indexed annuity business from producers without a Financial Institution, as the 84-24 Exemption is also available. 

    • Beginning January 1, 2018: If producers do not have a Financial Institution in their hierarchy, we cannot accept fixed-indexed annuity business involving a deposit to or withdrawal from an IRA, ERISA Plan or 401 Plan. 

    Who can serve as a Financial Institution?

    Under the rule, a bank, broker/dealer, registered investment adviser or insurance company can serve as a Financial Institution. We must receive a signed DOL Fiduciary Rule Agreement from each entity that will serve as a Financial Institution under the BICE. Please see the Resources section of this webpage for copies of the Agreements. You also may want to view our Broker/Dealer Master Agreement or list of approved Registered Investment Advisors

    Note IMOs having a relationship with an entity eligible and willing to serve as the Financial Institution (such as a registered investment adviser) should use the Agreement for Insurance Agencies. The agreement must be signed by the IMO and the entity serving as the Financial Institution. The entity serving as the Financial Institution must also provide us with a list of producers for whom it will be serving as the Financial Institution.

    How do I know if there's a Financial Institution in my hierarchy?

    You will soon be able to view your hierarchy and confirm if there's a Financial Institution by logging into our agent secured website. If you have a Financial Institution in your hierarchy, you will need to contact that Financial Institution to find the processes and procedures applicable to BICE transactions. If you don't have a Financial Institution in your hierarchy, please contact your upline to discuss your options.

    I am a Financial Institution. How do I view my downline?

    You will soon be able to view the downline list of agents for whom you will be serving as the Financial Institution under the BICE by logging into our agent secured website.

    Are there any changes to the new business process?

    Aside from the Exemption requirements outlined above, there are no changes to the new business process, including suitability reviews.

    Do I have to carry fiduciary liability with my E&O coverage?

    Great American will not require fiduciary liability coverage. It is up to producers to evaluate their needs and make the decision that is right for them.

    Are there any new training requirements?

    There are no new training requirements. However, we strongly encourage producers to take training on the Rule and are pleased to offer LIMRA's Fiduciary Education for Sales & Service Professionals Program. You can access the training here. Refer to these login instructions for assistance. 

    Are there any product changes?

    We are not making any changes to existing products as a result of the rule. Our products are designed to simplify the road to retirement security with no hidden fees or surprises.

    We are taking direction from several Financial Institutions that are requiring implementation surrounding reasonable compensation practices.

    Are there any changes to existing contracts?

    Depending on how you were contracted, you may have received a DOL Fiduciary Rule Amendment. No action is required with the amendments. The entities that will be serving as a Financial Institution are required to complete a DOL Fiduciary Rule Agreement. Please see the Resources section of this webpage for samples of these documents. The amendments and agreements apply when the rule takes effect.

    Are there any changes to the contracting process?

    There are no changes to our contracting process. Background checks and due diligence requirements will continue as usual.

    We did update our contracting paperwork to include the DOL Fiduciary Rule Amendment, so please be sure to visit our agent websites for the most up-to-date versions.

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    Resources

    Great American Life Amendments 
    Great American Life Agreements
    Annuity Investors Life Amendments - Fixed Annuities
    Annuity Investors Life Agreements - Fixed Annuities
    Annuity Investors Life - Variable Annuities