The economic slowdown caused by the COVID-19 pandemic has pushed more older workers out of work. Many of those affected are increasingly anxious about their retirement security.
The last thing policymakers should do now is to create more anxiety for those needing some retirement certainty.
Unfortunately, that’s exactly what the Department of Labor has done with its first offering.
The Department incorrectly reinterprets rules in a way that may reduce consumers’ choices and access to a variety of retirement planning information and products.
As the American Council of Life Insurers (ACLI) stated in testimony for the Department’s public hearing today, it is critical that the Department avoid rules that make it harder for Americans to secure their retirement.
No two retirement savers are alike. Some prefer a buy-and-hold strategy, working with financial professionals who earn transaction-based commissions. Others opt to pay for ongoing advice and management services from fiduciary advisers.
It is essential that consumers retain access to both fiduciary and non-fiduciary services. The Department’s summer offering regarding the regulation of investment advice could widely impose broad fiduciary obligations similar to the Department’s 2016 misguided fiduciary regulation.
Before it was vacated by the Fifth Circuit Court of Appeals, that fiduciary-only elitist approach restricted access to professional guidance that retirement savers with low and moderate means want and need.
Retirement savers deserve and expect fair treatment. Both the Securities and Exchange Commission’s (SEC) Regulation Best Interest (Reg BI) and the National Association of Insurance Commissioners’ (NAIC) revised model regulation on annuity transactions enhance the standards for sales professionals while ensuring savers retain access to, and information about, annuities.
ACLI actively supports these initiatives. We also seek the appropriate application of fiduciary requirements to those who are paid to provide impartial investment advice.
The SEC has clarified the rules for fiduciary advisers. The Department should now align its effort with those of the SEC and the NAIC, and leave no doubt for lower and middle-income savers. Retirement savers deserve to be free to choose among fiduciary and transaction-based services and know that robust consumer protections are in force.
Jim Szostek is Vice President & Deputy, Retirement Security at the American Council of Life Insurers (ACLI). He helps guide ACLI policy on legislation and regulations affecting the U.S. retirement system. Prior to joining ACLI in 2008, he held positions at CIGNA and The Hartford.
