Products July 9, 2012

Online Tools Target Needs of High-Net-Worth Clients, Small Business

 

John Hancock Life Insurance’s Advanced Markets Group developed two technology tools for funding retirement appropriately, and helping project estate values and taxes.

 

 

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With the Business Analyzer, advisers can help business owners determine the most appropriate nonqualified plan options available to help them address retirement and estate planning objectives for themselves and for key employees within the organization.

For small-business owners, attracting and retaining the right people is central to business success, according to Randy Zipse, vice president and head of the Advanced Markets Group at John Hancock. In many instances, the business owner and key employees may quickly hit the limit for savings in a qualified retirement plan like a 401(k).

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The Business Analyzer helps advisers choose the optimal nonqualified plan options for their clients. An interactive decision tree facilitates data-gathering to help narrow nonqualified plan options such as a Restricted Endorsement Bonus Arrangement, Supplemental Executive Retirement Plan or Executive Bonus Plan. It assists in retirement funding issues as well as estate planning objectives.

The Estate Tax Calculator enables advisers to project estate values and potential estate taxes for high-net-worth clients, for whom the potential impact of estate taxes is a crucial financial consideration. Clients can also see the gift taxes due on a new gift, or estate taxes due on an estate that has made previous taxable gifts.

“The Business Analyzer and Estate Tax Calculator simplify the process of determining the right plan,” Zipse said. “Whether it’s funding retirement and compensation, or ensuring clarity about the potential impact of estate taxes, finding the right answer means asking the right questions.”

 

Compliance July 9, 2012

SEC Takes Another Step in Regulating OTC Derivatives

 

 

The Securities and Exchange Commission (SEC) took another step toward regulating over-the-counter (OTC) derivatives by approving rules and interpretations for key definitions of certain derivative products.

 

 

 

 

 

 

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The SEC rules and interpretations further define the terms “swap” and “security-based swap” and whether a particular instrument is a “swap” regulated by the Commodity Futures Trading Commission (CFTC) or a “security-based swap” regulated by the SEC. The SEC action also addresses “mixed swaps,” which are regulated by both agencies, and “security-based swap agreements,” which are regulated by the CFTC but over which the SEC has antifraud and other authority.  

The rules and interpretations written jointly with the CFTC implement provisions of the 2010 Dodd-Frank Act that establish a comprehensive framework for regulating over-the-counter derivatives (see “SEC Provides Guidance on Swaps Requirements”).   

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Regulation of OTC derivatives, such as interest rate swaps, which have become standard tools for reducing risk for defined benefit plans, may change the way pension plans will use such instruments (see “Regulations Changing DB Use of OTC Derivatives”).    

When the regulations were first proposed, the ERISA Industry Committee urged regulators to exclude from the major participant definitions employee benefit plans that are subject to the fiduciary provisions in Title I of the Employee Retirement Income Security Act (ERISA), noting that the investment activities of ERISA Title I plans are already extensively regulated and pose little risk to the U.S. financial system (see “ERIC Urges Exclusion of Benefit Plans from Swap Regs”).

The regulations could also affect defined contribution plans that hold stable value contracts. The SEC and CFTC are doing a study to determine whether stable value contracts fall within the definition of a swap, and if so, whether exempting such contracts from the swap definition is appropriate and in the public interest (see “Regulators Seek Comment on Stable Value Contract Study”).  

The latest SEC rule is at http://www.sec.gov/rules/final/2012/34-67286.pdf. Once both agencies adopt the final rules, they will become effective 60 days after the date of publication in the Federal Register.
 

 

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