Compliance December 10, 2008

Two RMD Delay Bills Filed

Two Republican U.S. Senators have introduced proposals to delay enforcement of retirement plan required minimum distribution (RMD) rules because of the struggling economy.

Reported by

Fred Schneyer

The bill by Senator Olympia J. Snowe (R-Maine) would put off RMD rule enforcement until 2010 and permit investors to “recontribute” to their accounts the amount they were required to take out of their plans in 2008, according to a news release.

“Retirees are counting on the money they’ve saved during a lifetime in these retirement accounts only to see much of it evaporate this year,” said Snowe, in the release. “We must give individuals time to recover their losses and not require them to prematurely withdraw their hard-earned savings.”

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Snowe introduced The Worker, Retiree and Employer Recovery Act of 2008, before the Congress adjourned for its Thanksgiving break, and again, in her latest statement, called on lawmakers to pass that measure authorizing a one-year RMD rule waiver (see “U.S. Senate Legislation Would Help Retirement Plans’).

Meanwhile, a separate measure introduced by Senator Arlen Specter (R-Pennsylvania) would delay the distributions for 2008 and 2009. Specter also cited “the economic situation” and “unstable financial markets” as reasons to delay the required distributions.

Data & Research December 10, 2008

Advisers Like Independence—Just Not Too Much

Financial advisers expressed that a combination of independent broker/dealer and traditional career system offerings would make them most successful, according to a survey released by John Hancock Financial Network (JHFN).

Reported by

Ellie Behling

The polled financial representatives showed a strong preference for certain offerings of a traditional career system, with seven in 10 preferring to work for a nationally recognized company over an independent firm (71% verse 29%), according to a release of the survey results. The health and retirement benefits usually associated with a career system were also preferred by a majority. Nearly 70% of respondents expressed a preference for access to a subsidized health care platform compared with increased incentives (30%).

However, experienced financial representatives also showed a strong preference for certain offerings usually associated with an independent broker/dealer, JFHN said. Nearly nine out of 10 respondents prefer to sell from an open product platform than from a proprietary platform. They also overwhelmingly prefer to be recognized for their total sales regardless of product mix (80% verse 19% for product-line sales). In terms of training support, two-thirds prefer to receive their training locally from experts in the field rather than from a home office (68% verse 31%).

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The survey also asked respondents to rank the importance of a number of key attributes. The top five attributes considered “extremely important” included:

open product platform (75%);
operational and customer service support (68%);
equity/ownership in business (63%);
automated business process (53%); and
an affiliation with a nationally recognized company (43%).

Additional attributes that were ranked “extremely important” included:

rewards and incentives (42%);
the opportunity to network with successful experienced financial representatives (32%);
subsidized healthcare benefits (33%);
sales training (29%); and
an annual recognition trip (18%).

JHFN President Peter Gordon said the research reaffirmed John Hancock’s internal research that serves as the basis for its business model (see “John Hancock Announces New Adviser Business Model“). “The survey validated our assumptions that financial representatives want to align themselves with an organization that blends the resources and stability of a career organization with the entrepreneurial opportunities of an independent firm,” Gordon said, in the release.

The survey of more than 1,000 experienced financial representatives from 161 firms, conducted for John Hancock Financial Network (JHFN), was developed by Mathew Greenwald & Associates.