Market volatility is especially unnerving after decades of working and saving. The antidote is smart, sound financial education, information and options.
Fortunately, the Securities and Exchange Commission (SEC) adopted rules last June, and the National Association of Insurance Commissioners (NAIC) adopted a model regulation in February, to make sure people can get the help they need in a way that’s more consumer-focused than ever before.
The SEC and NAIC required financial professionals to act in consumers’ best interest, whether securities or life insurers’ products are at issue. While SEC actions are automatically national standards, individual states must act on the NAIC model. A dozen are likely to act this year as the movement grows toward a national, harmonized standard of care.
The SEC rule and the NAIC model also keep annuities, the only financial product guaranteeing lifetime income, a way to create your own pension, available.
It wasn’t long ago access to these options were threatened by a “fiduciary” regulation from the U.S. Department of Labor under the previous administration. The department pushed all savers toward “fee-for-service” fiduciaries favored by the wealthy with portfolios to manage, and away from commission-based professionals who typically offer annuities.
The U.S. 5th Circuit Court of Appeals in 2018 vacated the proposed regulation, shifting the debate’s focus to the SEC and NAIC, which were developing similar consumer-based approaches.
They acted just in time, as did Congress in passing the SECURE ACT in December, which cleared the way for more employers to offer annuities in retirement plans.
As a result, consumers will have access, if they chose, to financial products they want and need.
They’ll also have access to trusted, local financial professionals who can educate, inform and offer options for lifetime income guarantees.
Put together, public policy on the topic will be more consumer-focused than ever before as the SEC “Regulation Best Interest’s” compliance date takes effect in June, the NAIC model is adopted in the states, and employers embrace the opportunities for their employees in the SECURE Act.
Jack Dolan is Vice President, Public Affairs at the American Council of Life Insurers (ACLI). A former journalist and Capitol Hill aide, he joined ACLI in 1991. He has represented ACLI in print, broadcast and online news outlets on a wide range of financial and retirement security issues facing American families.
