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market spotlight | quarterly review

Riding the momentum following the presidential election, stocks surged for much of the first quarter of 2017. Buoyed by the anticipation of tax cuts and policies favorable to domestic businesses, the benchmark indexes listed here reached historic highs throughout the quarter. At the end of January, the Dow reached the magic 20000 mark for the first time, while the tech-heavy Nasdaq gained almost 4.50% for the month. The trend continued in February, as stocks posted solid monthly gains. The Dow closed the month with a run of 12 consecutive daily closings that reached all-time highs. The S&P 500 also achieved a milestone — 50 consecutive trading sessions without a daily swing of more than 1.0%. At the close of trading in February, each of the benchmark indexes listed here posted year-to-date gains, led by the Nasdaq, which was up over 8.0%.

March began with a bang but ended with a whimper. The Dow closed the first week of the month at over 21000, while the Nasdaq gained over 9.0% year-to-date. However, energy stocks slipped as the price of oil began to fall. Entering mid-March, investors exercised caution pending the potential Fed interest rate hike and the push for a new health-care law. Following its mid-March meeting, the Fed raised interest rates 25 basis points, while the move to replace the ACA with a new health-care law failed for lack of congressional support.
For the quarter, each of the indexes listed here posted impressive gains over their fourth-quarter closing values. The Nasdaq climbed the most, posting quarterly gains of close to 10.0%, followed by the Global Dow and the S&P 500, which achieved its largest quarterly gain in almost two years. Long-term bond prices increased in the first quarter with the yield on 10-year Treasuries falling 6 basis points. Gold prices also climbed during the first three months of the year, closing the quarter at $1,251.60 — about 8.5% higher than its price at the end of the fourth quarter.

did you know?

There have been many twists and turns in the DOL’s fiduciary rule, and those changes may not be done. Here is a timeline of key events and upcoming deadlines:

  • April 8, 2016. The DOL makes its final ruling, defining who is a “fiduciary” under the Employee Retirement Income Security Act of 1974.
  • April 4, 2017. The DOL delays the application date by 60 days, moving back the date from April 10 to June 9.
  • June 9, 2017. The fiduciary rule goes into effect; however, until December 31, 2017 advisors and institutions can use adherence to just the Impartial Conducts Standards to comply with the fiduciary rule when engaging in a prohibited transaction.
  • January 1, 2018. Advisors and institutions will need to fully comply with all requirements of the fiduciary rule, including compliance with the full Best Interest Contract Exemption when applicable.


bright ideas

On April 8, 2016, the Department of Labor (DOL) made its final ruling on who is a “fiduciary” and, for a year now, financial professionals have been preparing in one way or another for this new normal.

At Beacon, we already worked under a fiduciary standard, but that didn’t stop us from working with all our financial partners on new processes. For over a year now, we have been studying the final DOL rule and working with our partners, making sure everybody’s on the same page with how we’re going to handle this ruling.

As you know by now, with the clock ticking down on the original April 10 application date, the Department of Labor (DOL) provided a 60-day extension. This recently pushed the application date of the fiduciary rule to June 9. What does this mean for you?

Less Cumbersome
Along with the delay, the DOL changed the language on how the fiduciary rule would be enforced during the grace period or transition period—from June 9 until January 1, 2018. Under the previous language, anything that is considered a prohibitive transaction, such as referral fees or 12B-1 fees, would require compliance with the full Best Interest Contract Exemption (BICE) or Principal Transaction Exemption.

The new language covering the transition period is much less cumbersome. Now advisors can adhere to the Impartial Conduct Standards in lieu of complying with the arduous full BICE when seeking relief from a prohibited transaction through the end of the year. The Impartial Conducts Standards state that advisors and firms:

  • Act in the best interest of retirement investors
  • Receive no more than reasonable compensation for their services
  • Make no material misleading statements about a recommended transaction, fees and compensation, material conflicts of interest, or any other relevant matters.

This new language caught most people within the industry by surprise, but it’s a win for advisors and financial institutions. It’s the kind of change the industry was hoping for and allows for an easier transition until January 1, 2018.

The Trump Effect
During the Presidential campaign, one of Trump’s promises was a move toward deregulation. Many wondered if this meant the DOL rule would be changed significantly or completely overturned. Earlier this year, a Texas district court judge ruled in favor of the DOL and the Fiduciary Rule. Judge Barbara Lynn denied the plaintiff’s (U.S. Chamber of Commerce) motion for summary judgment and upheld the DOL’s motion while shooting down each of the plaintiff’s seven key challenges to the fiduciary rule. Does that mean the battle is over? No, but we believe it is prudent that all financial professionals should prepare now for the rule as it’s currently worded.

Start Now
The delay gives you more time before the fiduciary rule goes into effect, so use that time to make sure you can hit the ground running. With nearly two months before that June 9 deadline, now is the time to leverage the experts, whether that’s our team at Beacon or your company’s back office, compliance department or ERISA team.

At Beacon, we have been working nonstop the last year in preparing for the DOL and have created literature and webinars that we will be rolling out in the near future. These are educational in nature and will help further explain the DOL’s changes, how it affects advisors, and what you can do to comply. We will explain in detail, for instance, how a firm that engages with third-party managers as a solicitor can continue to receive compensation and use those managers going forward while avoiding prohibited third-party compensation.

At Beacon, we are committed to compliance and educating our partners on the DOL. For further assistance on how the fiduciary rule will impact you, contact your wholesaler today!

Please note none of the information discussed above should be considered or viewed in any way as legal advice. As always, we strongly encourage that you consult with your firm’s own compliance department and ERISA counsel for legal guidance.

beacon news

Be sure to check out Chris Cook’s recent appearance in U.S. News & World Report: Why You Shouldn’t Abandon ETFs in Retirement

For more news & press features from Beacon Capital Management to use in your client conversations, visit News & Press on our website!



Beacon Capital Management, Inc. is an investment advisory firm registered with the Securities and Exchange Commission. Additional information about Beacon Capital Management is also available on the SEC’s website at under CRD number 120641. Beacon Capital Management only transacts business in states where it is properly registered, or excluded or exempted from registration requirements.

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