South Dakotans have plenty to be proud of.
Tourists flock every year to Mount Rushmore, Badlands National Park and the Black Hills. Not to mention Wall Drug, Deadwood and the Corn Palace.
Thanks to recent action by the governor, there’s a new attraction in South Dakota. But this one will appeal to residents, not tourists.
South Dakota Governor Kristi Noem recently signed a law that incorporates the enhanced consumer protections in the National Association of Insurance Commissioners’ (NAIC) updated model regulation on annuity transactions.
The law enhances the standards financial professionals must follow while ensuring that individual savers maintain access to, and information about, annuities, the only financial product in the marketplace that can provide guaranteed lifetime income.
South Dakota is in good company as 20 other states have adopted similar rules or laws. Building on this momentum, several more states are considering comparable measures to protect their citizens. Now that’s something to be proud of.
The actions in the states closely align with the Securities and Exchange Commission’s Regulation Best Interest, which took effect last year. And, unlike a fiduciary-only approach, these measures ensure savers, particularly financially vulnerable middle-income Americans, can access information about different choices for long-term security through retirement. According to a recent study, a fiduciary-only approach would shut down access to financial inclusion for 10 million households.
With these enhanced state and federal consumer protections, savers can be assured that financial professionals must act in the consumer’s best interest when offering recommendations about annuities. The U.S. Congress confirmed the importance of lifetime income when it passed legislation in 2019 that made it easier for employers to include annuities in workplace retirement plans. These protections safeguard consumers while also ensuring that middle- and working-class families will retain access to annuities.
More states should follow South Dakota with this practical consumer protection. Then more consumers looking to protect their family’s financial future will benefit from a best interest standard of care, no matter where they’re proud to call home.
(Jennifer Soma, NAIFA-SD President, is from Brookings, South Dakota.)
Vince Ryan is Regional Vice President, State Relations at the American Council of Life Insurers (ACLI). He is responsible for state legislative and regulatory affairs in Delaware, New Jersey, Iowa, South Dakota and Wyoming. He joined the ACLI in 2019 from the Delaware Insurance Department.
Jennifer Soma, NAIFA-SD President, is from Brookings, South Dakota.
