believesthe Department of Labor's final rule establishing a fiduciary standard forretirement savings advice was mostly constructive for its business model.
Thechange maintains commissions as appropriate compensation alongside fees andrecognizes that they can be more cost-effective for investors who do not tradefrequently, CFO Randal Freitag said during Lincoln National's conference callto discuss first-quarter earnings.
Becausethe best-interest contract exemption maintains commissions as acceptable,investors can choose the payment structures that work best for them, Freitagsaid, adding that grandfathering existing accounts removed the possibility ofmajor disruptions. Further, the final rule acknowledges the value that lifetimeincome guarantees that annuities provide.
Includingmore advice that would count as education also suits the company's advisoryservices, Freitag said.
"Theexpansion of the education definition leaves our high-touch retirement businessvalue proposition intact," the CFO said.
Onthe negative side, Freitag cited the inclusion of indexed annuities amongproducts that must be included in the more strict standards of disclosure andlegal accountability. Compliance with that part of the rule will take someextra work in the company's independent distribution channels, he said. Thechange would cover just a small slice of Lincoln Financial's business, and thecompany does not expect a significant impact to its business.
Thecompany's distribution partners have said they would use the best-interestcontract exemption for commissions and will need to trim shelf space and focuson fewer, higher-quality companies, "which, I believe, would be anadvantage to Lincoln over the long term," Freitag said.