Major life insurance and annuity manufacturers say they’re ready for the June 9 phase-in of the U.S. Department of Labor’s fiduciary rule. Measures they’ve instituted to prepare for the regulation’s implementation are wide-ranging, including the rollout of best practices and disclosures to help advisors comply with the rule’s Best Interest Contract Exemption, technology upgrades to help with compliance and reporting, and the debut of DOL-compliant, fee-based variable and fixed indexed annuities.

Representative of the manufacturer comments is a statement from AXA. While harboring reservations about the rule’s requirements and its impact on retirement investors, the French insurer declares itself, and its producers, well equipped for the rule’s impartial conduct requirements.

“AXA is prepared to abide by the provisions of the rule that will be operative when it takes effect on June 9,” the company says. “That said, we continue to believe that the rule as written will adversely affect middle-income and smaller investors by limiting access to professional investment advice and constricting product choices, and so we look forward to further input from the Administration, review by Secretary [Alexander] Acosta, as well as possible involvement from other regulatory bodies, such as the SEC.”

Also offering assurance of its readiness is Springfield, Mass.-based MassMutual. A company spokesperson states that that the mutual insurer and its advisors “have always has acted — and will continue to act – in the best interests of our policyowners and customers.” The spokesperson adds MassMutual will continue to “assess changes” in advance of Jan. 1, 2018, when the rule becomes fully operational.

Declaring fidelity to the rule’s best interest standard is not, however, enough to ensure compliance to the rule’s myriad requirements. Among them: disclosing potential conflicts of interest under the best interest contract (BIC) exemption; establishing compensation structures deemed to be “reasonable;” and the revising of business processes and practices to align with the rule.

For some insurers, the overhaul has entailed upgrades to back- and front-office IT systems. Ohio National says much of its preparation entailed “technology work” needed to comply with the rule’s reporting requirements and compensation structures. The carrier also modified processes to “align with more clearly defined roles and responsibilities under the rule.”

O.N. Equity Sales Company (“ONESCO”), Ohio National’s affiliated broker dealer, has also developed “policies and processes” necessary to comply with the rule’s BIC exemption. The broker dealer will also continue to offer a “broad range of products” to retirement investors, including ONcore variable annuities and variable universal life insurance products from more than 50 carriers (including Ameritas, Jackson National, OneAmerica and Transamerica).

“Our biggest change in technology was determining information required by our multiple distribution partners to support their disclosure requirements and then building the systems to calculate and deliver that information,” says Michael DeWeirdt, senior VP, annuities strategic business, at Ohio National. “Additionally, for certain businesses we needed to collect new information to track the source of funds that could trigger DOL obligations. We have built processes and procedures to support our compliance with the rule.”

Other carriers are revamping their product lines, including both fixed indexed and variable annuities, to align producer compensation structures with the rule. The measures include a leveling (or lowering) of compensations among like products; plus the rollout of fee-based based products, many of them offerings that match existing features and benefits in commission-based offerings.

These include fee-based FIAs from AIG, Allianz Life, Lincoln Financial, Voya Financial and Pacific Life. The most recent launch from this group was the Pacific Advisory Index, an annuity that ties the annuity’s account value to the S&P 500 Index or to an MSCI EAFE Index. On the variable side, Allianz Life also launched in May two versions of its indexed variable annuity to appeal to fee-sensitive clients: Index Advantage ADV and Index Advantage NF.

In manufacturing these products, carriers also have reduced mortality and expense (M&E) charges, given the ability to dispense with up-front commissions. This was the case, for example, with Lincoln National’s Core Income VA iShares Product, which was developed with BlackRock, according to John Kennedy, head of retirement solutions at Lincoln.

A growing number of variable annuity contracts incorporate BlackRock’s iShares exchange-traded funds, to which advisors can attach a fee (separate from the contract fee). Insurers also sell these products directly to consumers.

According to Morningstar, 22 of these iShares ETF contracts were released in 2017 — a significant increase from prior years. Between 2014 and 2016, the new issues ranged between three and 10. Those that unveiled a half-dozen or more iShares contracts since 2011 include Great-West, Lincoln National and Transamerica.

As for Nationwide, the company’s claim to fame in the fee world stems from its acquisition of Jefferson National — now Nationwide’s Advisory Solutions business — completed in March. The unit’s signature product, Monument Advisor, is a flat-fee based variable annuity that boasts nearly 400 mutual funds with which RIAs and other fee-based financial professionals can build a diversified portfolio.

Mitchell Caplan, the former CEO of Jefferson National and leader of Nationwide’s advisory solutions business, says the merger will “accelerate” development of a broader line of fee-based products and services. The company recently launched an optional guaranteed return of premium enhanced death benefit rider featuring the “consumer value, transparency and…open architecture” that fee-based advisors look for.

“Ultimately, we will grow in ways that our companies could have never achieved individually,” says Caplan. “And this will increase Nationwide’s ability to serve more advisors and customers in the ways they prefer to do business.

“When Nationwide joined forces with us, their primary driver was not the DOL — it was their recognition that the industry was evolving as more advisors were moving fee-based,” he adds. “And while the…fiduciary rule has been a catalyst for change across the industry, in many ways this new regulation validates the way that we have always done business.”

As for the parent company, Nationwide debuted this month resources and tools to help advisors comply with the rule. Available on the Nationwide Retirement Institute DOL website, they include an FAQ about the rule’s transition period and information relative to making prudent product recommendations.