Nashville has long been known as Music City. It’s home to the Grand Ole Opry and the Country Music Hall of Fame, and it’s where chart-topping stars like Dolly Parton, Garth Brooks and Taylor Swift got their start.
The latest hit from Nashville, however, didn’t come from Music Row or the Ryman Auditorium, but from an office building adjacent to the Tennessee State Capitol. That’s where the Department of Commerce and Insurance, led by Commissioner Carter Lawrence, recently adopted a rule that incorporates enhanced consumer protections for annuity transactions.
The rule, which derives from a National Association of Insurance Commissioners’ (NAIC) updated model regulation, enhances the standards financial professionals must follow when making recommendations regarding annuities, the only financial product in the marketplace that can provide guaranteed income for life.
This is sweet music for all savers in the Volunteer State.
Tennessee became the 31st state to adopt such laws or regulations. Building on this momentum, several additional states are considering action to protect their residents.
Following NAIC guidance, these state measures closely align with the Securities and Exchange Commission’s Regulation Best Interest. Unlike a fiduciary-only approach, these measures are intended to ensure that savers, particularly financially vulnerable lower- and middle-income Americans, can maintain access to information about different choices for long-term security throughout retirement. According to a recent study, a fiduciary-only approach would curtail access to financial inclusion for 10 million households. Another survey found that middle-income retirement savers would be “very concerned” about a regulation that restricted access to the professional financial guidance savers want and need.
With enhanced and harmonized state and federal consumer protections, savers can be assured that financial professionals are obliged to act in the their best interest when offering recommendations about annuities. This is timely, as the U.S. Congress reaffirmed the importance of lifetime income, when it passed legislation in 2019 and 2022 to make it easier for employers to include annuities in workplace retirement plans and simpler for savers and retirees to utilize annuities that fit their needs. Updated state standards, like in Tennessee, safeguard consumers while also ensuring that middle- and working-class families will retain access to easy-to-understand financial information.
More states should follow Tennessee in protecting residents and encouraging long-term financial security. Then all Americans looking to protect their family’s financial future could benefit from a best interest standard of care, no matter where they reside or what their favorite music is.
Laura Leigh Latta is Regional Vice President, State Relations at the American Council of Life Insurers (ACLI). She is responsible for state legislative and regulatory affairs in Alaska, Kentucky, Louisiana, Mississippi, Tennessee, and West Virginia. Laura Leigh leads ACLI’s advocacy team on issues related to tax, unclaimed property, and state guaranty associations.
Scott Flowers, NAIFA-TN President, is from Murfreesboro, Tennessee.