Consumer Access to Vital Financial Security Products Threatened by PRO Act
Ensuring your financial security can be daunting. From understanding investment options in your 401(k) to assessing the type and amount of life insurance needed to support your family – there are many choices to be made.
Experienced professionals can help – including insurance producers, independent broker dealers (IBDs) and independent financial advisors (IFAs). Not only do these professionals have the expertise and knowledge to provide consumers with many choices, they understand how to assess a person’s financial situation holistically and provide products that best fit their needs.
Yet, legislation that was just passed by the U.S. House of Representatives, H.R. 2474, the Protecting the Rights to Organize Act (PRO Act), threatens to hamstring those who offer important financial security products to consumers. The PRO Act changes how insurance producers, IBDs and IFAs are classified under the National Labor Relations Act (NLRA).
Why does their current classification as an independent contractor matter? Well, insurance producers, IBDs and IFAs operate in a heavily regulated and well-documented industry. They often own and operate their own small businesses and have flexibility and control over their business models. This means they can sell a wide variety of products and tailor the options to meet the needs of their clients.
Changing the test which determines how independent contractors are classified could mean that these financial professionals would no longer be classified as independent contractors. This change could negatively impact consumers because it would curtail how insurance producers, IBDs and IFAs do their jobs and what types of products they could offer – ultimately reducing access to critical financial tools and products.
The current classification for insurance producers, IBDs and IFAs ensures that these professionals are able to serve more than 90 million American families with products that facilitate savings, provide protection against loss and guard against unplanned, potentially catastrophic life events.
We continue to educate Members of Congress about this important issue. As they reconsider the matter in 2021, it is vital that lawmakers understand the valuable role these financial professionals play in safeguarding Americans’ financial security and work to protect the current employment classification designation for our industry.