As the northernmost state in the continental U.S., Minnesota is aptly dubbed “The North Star State.” But now that nickname is fitting in another, symbolic context.
On May 22, thanks to bipartisan legislative action, Minnesota became the 25th state to enact the enhanced consumer protections in the National Association of Insurance Commissioners updated model regulation on annuity transactions. This marks the pivotal halfway point in the nation’s embrace of a best interest standard. Minnesota’s example shines brightly.
Backed by the state Department of Commerce, passed by a split legislature, and quickly signed into law by Democratic Governor Tim Walz, the Minnesota law requires financial professionals to place the interests of consumers ahead of their own when offering recommendations about annuities. Importantly, it also ensures individual savers maintain access to, and information about, annuities, the only financial products in the marketplace that can provide guaranteed lifetime income.
This best interest standard closely aligns with the Securities and Exchange Commission’s Regulation Best Interest. And unlike a fiduciary-only approach, a best interest standard provides transparency and protection without pricing people out of the retirement advice they need, particularly younger, lower- and middle-income working-class families.
According to a recent study, a fiduciary-only approach would eliminate access to financial professionals for 10 million households, significantly widening the retirement advice gap and disenfranchising moderate retirement savers in favor of their wealthier counterparts. That research translates to real concerns among many middle-income retirement savers, who, as a new survey reveals, value and rely on commission-based financial professionals and the products they offer, such as annuities. Fortunately, with best interest protections, like those now in Minnesota, savers can work with the financial professionals of their choosing and rest assured that they are acting in the best interest of consumers when offering recommendations about annuities.
The U.S. Congress reaffirmed the importance of lifetime income in 2019 when it passed legislation that now makes it easier for employers to include annuities in workplace retirement plans.
Half the country has recognized the importance of a best interest standard of care in safeguarding the financial futures of families. The remaining states should look to Minnesota as a guide, a North Star, and implement this consumer protection so that all Americans can access financial guidance and build a secure retirement.
Taylor Walker was Senior Legislative Director, State Relations, at the American Council of Life Insurers (ACLI). Taylor was responsible for legislative and regulatory advocacy in Indiana, Minnesota, Missouri, North Dakota, and Wisconsin and led her team on reinsurance, market conduct, and innovation/technology matters. She also served as ACLI’s advocate at the National Conference of State Legislatures.
Corey Anderson, NAIFA-MN Advocacy Vice President, is from Albertville, Minnesota.
Robyn Rowen is the Executive Director of the Minnesota Insurance and Financial Services Council (MIFSC).
