David M. Gelia

The IIABNY said it has given the New York State Insurance Department (NYSID) proposed wording for a document to help producers comply with the new rule, set to take effect Jan. 1, 2011, with the goal of greater compensation transparency. The new regulation requires insurance producers to disclose how insurers are compensating them initially and in greater detail if asked by a client.

The agents’ group submitted the recommendations May 13, according to a statement, following discussions with state regulators.

The IIABNY announcement comes as The Professional Insurance Agents of New York (PIANY) also submitted its recommendations for disclosure language following a May 10 meeting with NYSID staff.

Among its recommendations, the IIABNY suggested that the rule, known as Regulation 194, include wording to inform the client a producer may have access to more than one insurer for coverage; that a producer has legal and ethical obligations to both the client and the insurer; and that compensation may vary between insurers based on contracts with producers, with the volume and profitability of the producer’s business likely to impact the amount of compensation.

In February, the IIABNY and the Council of Insurance Brokers of Greater New York announced that they would take legal action to stop the regulation in court. The IIABNY said both groups continue to prepare for litigation.

“We are pursuing a dual track strategy on Regulation 194,” said IIABNY Board Chairman David M. Gelia in a statement. “While we continue to pursue our legal options for stopping this unnecessary and burdensome regulation, we have also developed language to help producers more easily comply should the regulation stand. We look forward to hearing the insurance department’s comments on our proposal.”

As part of ‘dual track strategy,’ IIABNY weighs in on disclosure rule via IFAwebnews.

The Connecticut-based insurer said the site also offers the latest information on products and continuing education courses.

CIGNA’s funding selection tool allows brokers to answer a series of questions, including whether a client would prefer a consistent monthly payment obligation for budget planning purposes and whether their client is considering the implementation of a wellness program. Following the completion of a questionnaire, brokers are directed to learn about the funding option that best fits their client’s needs, the company said, from a selection of insured and self-insured funding options.

“Small businesses deal with unique challenges when looking at benefit plans and costs and we expect this website to be a one-stop resource for our broker partners who work with them,” said Kurt Weimer, president of CIGNA Select segment, in a statement.

Through CIGNA’s partnership with Continuing Education University (CEU), the new website also offers free, online courses on topics including ethics and HSAs, along with “The Academy by CIGNA,” a course providing information on career goals and how to increase credibility through professional development.

CIGNA launches website to aid brokers in selecting health plans via IFAwebnews.

The day-long event will feature a panel discussion, starting at 8:30 a.m. Louise “BeBe” Canter, senior vice president at USI, will moderate the economy panel, slated to include Douglas W. Pera of Willis; Joseph S. Clabby, president of ACE USA regional operations; Mary Stewart, director of research and development for Public Entity Risk Institute and Lorna M. Parson, president and chief underwriting officer of Victor O. Schinnerer & Co. The session has been filed for qualification for continuing education credits.

The lunch speaker will be Eric O’Neill, a lawyer who specializes in counterintelligence and counterterrorism operations, investigations into economic espionage, internal investigations and security risk assessment consulting.

In the afternoon, four separate continuing education credit sessions. Those sessions will cover flood insurance, employment practices liability insurance, professional liability and ethics. The sessions will end by 4:30 p.m.

The event, costing $150, which includes breakfast and lunch, will be held at the Hilton Hotel, formerly the DoubleTree, at 1750 Rockville Pike in Rockville, Md.

For more information, visit the event’s website.

Annual Capital I Day to discuss weathering economic crisis March 19 via IFAwebnews.

The course, which has been filed for three ethics credits with the Maryland Insurance Administration, is scheduled to be presented in Salisbury, Md., Jan 21; in Hagerstown, Md., Feb. 3; and in Columbia, Md., Feb. 4.

Instructor Rita Hollada will cover personal and business ethics, including recognition of fraudulent practices, updates on reporting and details on related legislation.

Maryland producers whose licenses renew after Oct. 1, 2009, must complete three hours of ethics instruction within the 24 hours of CE necessary for renewal. Agents who are not required to meet the CE requirements every two years still must complete the ethics component.

The seminar is open to IA&B members and non-members. Registration is available by contacting the IA&B Member Service Center at (800) 998-9644, option 0, or by visiting iabgroup.com.

IA&B schedules three Maryland insurance ethics courses via IFAwebnews.

Doug Shulman

Doug Shulman, commissioner of the IRS, called proposed new requirements – including three-year registration requirements and the completion of 15 hours of annual continuing education courses – “a monumental shift in the way the IRS will oversee tax preparers.”

The IRS initiatives, announced Jan. 4, will take several years to implement and will not be in effect for the current tax season, IRS officials said.

However, starting this week, the IRS is sending letters to about 10,000 paid tax return preparers nationwide who are among those “with large volumes of specific tax returns where the IRS typically sees frequent errors,” according to an IRS statement. The letters remind preparers to be vigilant in areas where the errors are frequently found, including Schedule C income and expenses, Schedule A deductions, the Earned Income Tax Credit and the First Time Homebuyer Credit. Later this year, IRS revenue agents will visit each tax return preparers who received a letter with additional information and education, IRS officials said.

More investigations planned

The IRS also plans to investigate allegations against those preparing taxes improperly this year. Those investigations could include visits to return preparers by IRS agents posing as a taxpayer, the agency said in a statement. The IRS will work with the U.S. Department of Justice on civil and criminal actions, where appropriate.

Paid tax return preparers have few, if any, requirements, except in California, where rules similar to the proposed federal requirements are in effect. Outside of California, anyone may prepare a federal tax return for anyone else and charge a fee. While some preparers are currently licensed by their states or are enrolled to practice before the IRS, many do not have to meet any government or professionally mandated competency requirements before preparing a federal tax return for a fee, IRS officials said.

The new rules are expected to affect an estimated 1.2 million people who prepare tax returns for a fee in the U.S., including many life insurance and financial service professionals who often prepare their clients’ tax returns, either as a value-added services or to deepen the relationship with the client and his finances.

Ensuring competency

“Our proposals will help ensure taxpayers receive competent, ethical service from qualified professionals and strengthen the integrity of the nation’s tax system. In addition, we are taking immediate action to step up oversight of tax preparers this filing season,” Shulman said in a statement.

More than 80% of American households use the services of either a tax preparer or tax software to complete their annual tax returns, according to the IRS.

“Higher standards for the tax preparer community will significantly enhance protections and service for taxpayers, increase confidence in the tax system and result in greater compliance with tax laws over the long term,” the agency’s statement on the changes noted.

As part of its new education and outreach efforts, the IRS is providing tips to taxpayers to ensure they are working with a reputable tax return preparer.

Limited tax compliance checks

While announcing the changes, the IRS issued a 55-page “Return Preparer Review.” The report included the proposal that all paid tax return preparers sign a federal tax return to register with the IRS and obtain a preparer tax identification number (PTIN). Under the proposal, these preparers would be subject to a limited tax compliance check to ensure they have filed federal personal, employment and business tax returns and that the tax due on those returns has been paid, the agency said.

The IRS will require 15 hours of annual continuing professional education, including three hours of federal tax law updates, two hours of tax preparer ethics and 10 hours of federal tax law topics, according to the report.

“Competency tests will be mandated tests for all paid tax return preparers except attorneys, certified public accountants (CPAs) and enrolled agents who are active and in good standing with their respective licensing agencies,” according to the statement on the proposed changes. Later in the proposal, the word “agent” is clarified to include those “who practice before the IRS.”

Annual tax prep coursework

The proposed requirements would apply to licensed insurance agents and financial service professionals, according to IRS officials.

The proposed rules would require ongoing, annual continuing professional education for all paid tax return preparers, except attorneys, CPAs, enrolled agents and others who are already subject to continuing education requirements.

The IRS also wants to extending ethical rules found in Treasury Department Circular 230 – which currently only apply to attorneys, CPAs and enrolled agents who practice before the IRS – to all paid preparers. This expansion would allow the IRS to suspend or otherwise discipline tax return preparers who engage in unethical or disreputable conduct.

The report notes that all paid tax return preparers are subject to civil penalties for actions ranging from knowingly preparing a return that understates the taxpayer’s liability to failing to sign or provide an identification number on a return they prepare. Tax return preparers who demonstrate a pattern of misconduct may be enjoined from preparing further returns, the IRS said.

IRS boosts enforcement, proposing new rules for tax return preparers via IFAwebnews.

The survey, sponsored by QFINANCE, a website for financial information, also found that respondents say governmental regulators are poor in their effectiveness in handling the financial crisis.

When asked, “What is the single most important attribute a leading financial practitioner should possess today?” more than 19% cited “honesty,” “integrity” and/or “ethics.” Other attributes that rated multiple responses included “long-term view,” “skepticism,” “creativity,” “risk management” and “vision.”

The survey also asked respondents to rate on a scale of 1 to 10 (1 for poor; 10 for excellent) the effectiveness of government regulators to deal with the financial industry crisis. An overwhelming 72% gave government bad marks of 5 or lower, with 35% rating regulators’ effectiveness a 1 or 2. Only 28% gave government a 6 or better; no one said regulators were doing an excellent job.

Survey respondents – who included finance professionals at both large and small companies, with nearly half from companies with more than $50 million in revenues – were also given the chance to tell what message they would give financial community leaders (regulators and executives), in 10 words or less? Among the responses were:

• “Enforce current regulations…do not over-regulate.”
• “Without incentive, there would be no progress.”
• “Stop saying ‘too big to fail.”
• “Get back to basics: risk/reward management.”
• “Manage based on long-term returns to shareholders and society.”
• “Let the markets resolve the issues without interference.”
• “Don’t give/don’t take public money to private companies.”
• “Embrace honesty and integrity; sacrifice reward for the common good.”
• “Teach financial literacy and entrepreneurism.”
• “Don’t be swayed by general public opinion.”
• “Prevention is better than cure!”
• “Diversification, deregulation and talent.”

Survey: Honesty, integrity sought from financial service professionals via IFAwebnews.

Bowser, who holds a Certified Financial Planner certification, had appealed the case, originally decided by the organization’s CFP Disciplinary and Ethics Commission last summer.

He was originally admonished after he signed a consent order with the Maryland Securities Division in 2007 indicating that as chairman of the charitable group, he accepted a donation from a client, who subsequently made a loan to the unnamed charity and executed a promissory note.

Approximately a year later, another client made a loan to a business with which Bowser was affiliated. Bowser also was found to have violated the terms of a 2001 consent order issued by Maryland by continuing to sell unregistered securities and continuing to accept loans from clients. In that case, he was selling promissory notes, which Maryland found to be unregistered securities, according to the CFP Board.

The CFP commission found that Bowser’s conduct violated four rules of CFP Board’s Code of Ethics and Professional Responsibility, leading to his public admonishment. Bowser lost an appeal to the CFP Board’s Appeals Committee.

This story originally appeared in the August 2009 print edition of Insurance & Financial Advisor.

Maryland CFP member publicly admonished over link to charity via IFAwebnews.

James R. Klima was issued a letter of admonishment in December 2007, but appealed the ruling.

He was investigated by the CFP Board after a customer complaint regarding his alleged failure to notify in a timely manner the issuer of a variable annuity that his client had disclaimed her interest as beneficiary of the variable annuity and was, therefore, not entitled to receive the proceeds of the variable annuity upon her husband’s death.

Following a hearing, CFP Board’s Disciplinary and Ethics Commission made several findings, including that Klima acknowledged he could have annuitized the existing annuity, which would have been a less costly approach for the client than purchasing a new annuity for each of the client’s children and would have avoided the early withdrawal penalties and taxable income suffered by the adult children. He also was found to have failed to disclose the civil suit with the client on his CFP Certification Renewal Application, as is required.

The commission found Klima’s conduct in violation of Rules 201, 202, 607, 703 and 606(b) of CFP Board’s Code of Ethics and Professional Responsibility.

The commission said there needs to be more willingness on Klima’s part to disengage with his client when issues are beyond his level of expertise. The commission also expressed concern about what appeared to be a narrow focus in recommending annuities as a solution, stating its belief that Klima potentially sacrificed consideration of alternatives that could have been more beneficial to the clients.

In addition to the admonishment, Klima must complete 12 hours of additional continuing education in the next year, in including four hours each in the areas of estate planning, investments and estate distribution.

Columbia CFP publicly admonished for variable annuities actions via IFAwebnews.

William I. Kissinger was issued a letter of public admonishment in August 2007 related to a CFP Board investigation of a U.S. Securities and Exchange Commission Division of Enforcement investigation and enforcement proceeding over the share sales. The case has been on appeal since that time.

In July 2006, the SEC issued an Order Imposing Remedial Sanctions, which ordered Kissinger to cease and desist from committing any violations of Section 17(a)(2) and 17(a)(3) of the Securities Act of 1933 and to disgorge the amount of $36,170, plus prejudgment interest. Kissinger later settled the matter and paid $29,250, according to the CFP Board.

After a hearing, CFP Board’s Disciplinary and Ethics Commission found that Kissinger charged a client excessive fees and failed to take advantage of breakpoint discounts which would have been available had the client purchased A shares instead of B shares. The commission also found that the SEC had issued an opinion that stated Kissinger acknowledged his failure to make required disclosures to clients regarding the differences between mutual fund share classes, including the differences in cost structure. The commission further found that Kissinger negligently omitted material information to customers, a violation of the Securities Act of 1933. The commission found Mr. Kissinger’s conduct violated Rules 102, 201, 202, 402(a), 606(a), 606(b), 607, 701 and 703 of CFP Board’s Code of Ethics and Professional Responsibility.

In admonishing Kissinger, the commission said Kissinger must understand that he is responsible for due diligence and that such activities cannot be delegated because clients come to him for advice, and it is his responsibility to provide that advice in their best interest, according to the CFP Board. The commission also required him four extra hours of continuing education in ethics prior to his next renewal of CFP certification.

CFP commission publicly admonishes Cockeysville man via IFAwebnews.

This year’s event will take place at the Turf Valley Resort in Ellicott City, Md. The day begins at 10 a.m. with a board of directors meeting, followed by a membership meeting and a closed past president’s luncheon.

At 2 p.m. an ethics seminar will be available free to attendees. A cocktail hour will be held at 6 p.m. and the dinner begins at 7 p.m.

Following the installation ceremony, Moore will speak to the crowd and be on hand for autographs afterward. The IIAV will also be raffling off an authentic, autographed jersey to benefit the Leslie Moore College Scholarship Foundation, established after Lenny Moore’s son, Leslie, died with scleroderma at 43.

Moore, who played for the Baltimore Colts from 1956-1967 as a flanker/running back, amassed 12,451 combined yards in his career and was a seven-time All-Pro. He won Rookie of the Year honors in 1956, Player and Comeback Player of the Year honors in 1964 and was inducted into the Hall of Fame in 1975.

For more information on the event, call Shelley Arnold at 410-766-0600 or contact her via email.

Former Colt Lenny Moore to speak at IIAM Installation Dinner June 12 via IFAwebnews.