The Society News Kansas City Chapter

Vol. 12, No. 5 January 2013

Getting It Right - Know Your Fiduciary Responsibilities Thursday, January 10, 2013

7:30 - 9:00 am, Overland Park Marriott Hotel On January 10th join CYNTHIA SMITH SHEWMAKER, Senior Benefits Advisor/Outreach Coordinator for the United States Department of Labor, Employee Benefits Security Administration. She will review the basic rules of fiduciary responsibility under ERISA for retirement plans. She will discuss how to get it right by avoiding common problems, and provide information on voluntary correction programs. A more detailed outline of the topic follows: Getting it right means • Understanding your plan and your responsibilities • Carefully selecting service providers • Making timely contributions • Avoiding prohibited transactions • Making timely reports to government and disclosures to participants. ERISA and Internal Revenue Code Elements of a plan Fiduciary Responsibility - Overview • What and who is a “fiduciary” • Primary duties of a fiduciary • Limits on fiduciary duties • Failure to discharge fiduciary duties • Avoiding problems

Sponsor:

Prudence – If you need help, get it! Limits on fiduciary liability Section 404(c) of ERISA DOL Guidance There is one hour of CE credit available for PACE, CPE, CFP® and Kansas insurance. Missouri insurance is pending.

Office Of Outreach, Education, and Assistance The Office of Outreach, Education, and Assistance (OEA) administers the Employee Benefits Security Administration’s (EBSA) Participant and Compliance Outreach, Education and Assistance Program. This program, which received the 2008 USA Services Citizen Service Award, provides participant and compliance assistance directly to the public through a staff of Benefits Advisors, located in EBSA’s field offices, who answer inquiries and complaints received by phone, mail, electronically or in person. OEA coordinates the development of the Agency’s Strategic Plan for Outreach, Education and Assistance, establishes policies and operating procedures for the program, provides oversight and support to the Regional Offices in carrying out these activities, and oversees quality reviews and customer satisfaction surveys related to the program. EBSA’s Benefits Advisors responded to over 375,000 telephone, written and electronic inquiries and complaints from plan participants, employers and plan sponsors, assisting them in understanding their rights and obligations under the law and in obtaining benefits that may have been denied. The Benefits Advisors obtained over $164 million on behalf of participants and beneficiaries through informal dispute resolution. The Office leads the development and publication of a variety of educational materials for consumers and plan officials and is responsible for policy and content development for the Agency’s Website. The Office is also responsible for the operation of the nationwide toll free hotline for technical assistance and free publications. OEA coordinates three major education campaigns the Retirement Savings Education Campaign, the Fiduciary Education Campaign and the Health Benefits Education Campaign. OEA staff serves as the Executive Secretary of the ERISA Advisory Council, providing logistical, clerical and technical support throughout the year. OEA is responsible for the operation of the Agency’s Public Disclosure Room and handling Freedom of Information Act requests.

8826 Santa Fe Drive, Suite 208, Overland Park, KS 66212 • (913) 381-4458 • (913) 381-9308 fax • [email protected]

Fiduciary: the New Challenge in Financial Services By Richard M. Weber, MBA, CLU, AEP

President, The Society of Financial Service Professionals

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ection 913 of the DoddFrank Financial Reform Act directed the SEC to determine the extent to which harmonization of standards of care was appropriate between Registered Reps and RIAs, and the Society’s Standards of Committee (SOC) began in late 2010 to inform itself of issues relating to fiduciary standards of care that could affect FSP members. While both the Department of Labor and the SEC have postponed to 2013 their plans to define and potentially regulate around fiduciary, the Society’s SOC confirmed that our members’ professional activities are generally already held to a high standard due to our voluntary commitment to FSP’s Professional Code of Professional Responsibility — as well as those required by other affiliations, e.g. CFP Board’s fiduciary mandate. And this will be true whether or not the SEC or FINRA or DOL take individual or collaborative action to increase the standard of care from that of the lower suitability standard to the higher “client’s interest above my own.” Thus, while the progress of the original legislated initiative toward harmonization is in limbo, the issue for FSP members is not whether — but how — to best work within the framework of that mandate. A second issue is to what extent members who are neither RIAs or Registered Reps would be affected, and the SOC’s conclusion was that so-called “general account” insurance producers will likely get caught in the crossfire, if only because carrier compliance departments would find it risky to have producers who were

held at different levels of standard of care based on their license and/or regulatory status.

If we’re going to be held to a high standard - now what? Having completed the first phase of the Committee’s mandate to determine “what are we looking at and how will it affect our members?” — it is time to move into a leadership role within the industry. However, because the Society has long held itself outside the fray of political advocacy, it is important that we clarify that first and foremost, we will provide leadership to the industry in the realm of education and processes and procedures, and second, we must inspire the industry as a whole to appropriately respond so that those who practice in the higher standard can, in fact, provide meaningful, accurate, and actionable disclosure to their clients. Further, this cannot be put off until the issue of fiduciary completes the gauntlet of the political process. There are a significant number of insurance and investment product licensees who are today held to a high standard with respect to working with clients, including more than 10,000 CLU and/or ChFC members of FSP; an estimated 60%+ of the 65,000+ CFP Certificants who earn at least some commissions; and untold numbers of CPAs, JDs, CPCUs, RHUs, CIMAs, and those holding CFA and other professional designations who will at some time in their careers take up insurance issues in response to client inquiries.

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Policy Illustrations To this second objective of inspiring “client’s interest” disclosure to those buying insurance and investment products, the Society has created a second SOC committee internally referred to as the “Insurance Engagement & Understanding Team.” Its mandate is to create and work with a group of representatives from major industry constituencies, including Broker-Dealers, regulators, insurance companies, IMO/BGA, and illustration software vendors. The idea is to be as inclusive as possible with respect to stakeholders so that we might achieve the kind of industry consensus and cooperation established by the Society in the late 1980s and early 90s with the original Illustration Questionnaire (IQ) project. The objective of the “Insurance Engagement & Understanding Team” is to encourage insurance companies and broker dealers to take the next step in elevating life insurance policy illustrations — especially for current assumption universal life policies — to a level that provides sufficient information and interactivity to meet a customer-focused standard. We anticipate that the advent of iPad and

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Android Tablets, everywhere internet connectivity, and technology in general will allow for a significant leap in ways to acquire and manage information, display policy choices, and manage in-force policy information in dynamic, graphic formats that would allow us to generally move away from numbers-driven policy illustrations to which hardly anyone pays attention or understands. 2013 will bring a number of these processes and ideas to light, and we think Society members will be excited about the results!

RICHARD M. WEBER, MBA, CLU, AEP® PRESIDENT, THE ETHICAL EDGE, INC. Dick Weber is President of the Society of Financial Service Professionals - FSP - and in his spare time is President of The Ethical Edge, Inc., located in the San Francisco Bay Area. With 45 years of experience in sales, training, product design, marketing, compliance, and insurance company senior management, his firm provides training and consulting services that help empower life insurance agents, financial planners, advisors, and their clients to explore and view life insurance in the broader context of financial planning. Dick holds an M.B.A. from the University of California at Berkeley with a specialty in Insurance and Finance and was designated a Chartered Life Underwriter in 1974 by the American College. Once an Adjunct Professor of Ethics at the American College, he is now Adjunct Professor of Risk and Insurance at Cal Lutheran University’s MBA program in financial planning. Dick’s insurance expertise is reflected in the more than 300 articles he’s written for a number of industry, legal, and accounting publications. His research paper - Life Insurance as an Asset Class - received the Academy of Financial Services “Best Paper” Award for 2008. Part 2 of this paper has recently been published. Dick is the Society of FSP’s Kenneth Black, Jr. Leadership Award recipient for 2008 in recognition of his “... exemplary leadership qualities and significant contributions to the fulfillment of the Society’s core values of ethic, education, and relationships,” and in 2009, he was inducted into the National Association of Estate Planning Council’s Estate Planning Hall of Fame and selected to receive the Distinguished Accredited Estate Planner Award.

WE ARE AT THE OP MARRIOTT HOTEL

Upcoming Events - Mark Your Calendar January 23

4 - 6 pm Study Group - Location TBD

INVESTMENTS

February 13 (Wednesday)

7:30 - 9:00 am Roundtable - Overland Park Marriott Hotel ESTATE PLANNING - Rick Olewnik, AXA Advisors Speaker and Sponsorship provided by AXA Advisors

March 14

7:30 - 11:00 am Roundtable - Overland Park Marriott Hotel

ETHICS - Jim Boldt, Jim Boldt & Associates, LLC Sponsorship by Alerus and John Hancock

April 11



7:30 - 9:00 am Roundtable - Overland Park Marriott Hotel

ECONOMICS - Jason Young Speaker and Sponsorship provided by American Funds

May 9

7:30 - 9:00 am - Overland Park Marriott Hotel ANNUAL MEETING Sponsorship 3

by MFS Investments

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SPONSORS We wish to thank the following corporate sponsors for the Chapter this year.

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Kansas City Chapter 8826 Santa Fe Drive, Suite 208 Overland Park, KS 66212

www.financialpro. org/kansascity

REGISTRATION FORM

BOARD OF DIRECTORS

Name _________________________________________________

Officers

Phone ________________________________________________

President James W. Boldt, CLU, ChFC, LUTCF (913) 948-7209 • [email protected]

Company ______________________________________________ Email _________________________________________________

Vice President Kevin L. Petracek, CFP®, JD, LLM, CPA (913) 385-9400 • [email protected]

____Please sign me up for January 10, 2013 Roundtable N/C members, $35 guests

Secretary Jeffrey T. King, MBA (816) 468-7334 • [email protected]



Treasurer Jason Hannaman, CPA, CEBS (913) 234-1000 • [email protected]

____ENCLOSED is $_____________, check made payable to SFSP ____PLEASE CHARGE $____________ to my Mastercard/Visa/Amex

Past President Maris A. Haster, CLU (816) 286-0405 • [email protected]

No. ______________________________________________________

Directors

John Azodi, CPA (816) 455-9100 • [email protected]

Tim L. Vannoy, CLU, ChFC, CFP® (913) 403-5828 • [email protected] _____________________ Executive Director Sandra L. Sabanske, MBA (913) 381-4458 • [email protected] © 2012 FSP, Kansas City Chapter

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Expir date______________________ Signature of cardholder _____________________________________

Rusty Gallagher (913) 647-9700 • [email protected] Matthew T. Shull, CLU, CFP® (913) 327-7100 • [email protected]

Name of Guest ____________________________________________

Send to: Kansas City Chapter, Society of FSP 8826 Santa Fe Drive, Suite 208, Overland Park, KS 66212 or fax to: (913) 381-9308. Alternative Ways to Register: - Call 913.381.4458 - Go to Calendar page on web site: http://www.financialpro.org/kansascity

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2013