Don’t Look Back

It’s been said that the only time you should ever look back is to see how far you’ve come.

That’s sage advice, particularly for everyone concerned about consumer protection and financial security.

The life insurance industry strongly supports recent efforts to protect consumers as they seek financial information and to preserve access to critical tools like annuities. The advances made in the past few years have been superb for America’s savers.

Case in point: the Best Interest standard.  

The Best Interest Standard protects consumers without restricting middle- and working-class families’ access to financial recommendations. The National Association of Insurance Commissioners (NAIC) revised model regulation on annuity transactions (2020) along with the Securities and Exchange Commission’s Regulation Best Interest (2019), provide a robust framework that safeguards Americans planning and saving and managing their retirement nest eggs.

With Best Interest, financial professionals are required to act in the best interest of the consumer without placing his financial interest ahead of the consumer’s interest. As explained in a recent ACLI White Paper, a financial professional must satisfy four conduct obligations to meet the Best Interest standard:

• Care Obligation
• Disclosure Obligation
• Conflicts of Interest Obligation
• Documentation Obligation

More than 20 states across the country have adopted the NAIC model. The states represent a diverse cross-section of America, covering every region and governed by both Republicans and Democrats. Soon more states will join them.

Thanks to the Best Interest standard, the landscape for consumer protection is much different and improved since the Obama administration last tried to implement a fiduciary-only regulation in 2016. That effort, which was vacated by the Fifth Circuit Court of Appeals in 2018, hurt the very people it was intended to help by making it harder for working-class Americans to access annuities, which can provide steady retirement income like a traditional pension.

The Best Interest standard helps all Americans, regardless of race, gender or how much they earn or have save. If the Department of Labor’s approach is resurrected, many working Americans who don’t have $100,000 or more in savings required by most fiduciaries would lose support from financial professionals who receive one-time commissions.

Financial protections shouldn’t limit financial options. And all retirement savers deserve the right to choose how they pursue financial security.

There is no need to bring back a flawed regulation. Consumer protection has changed for the better in recent years. And you don’t have to look back to know that American consumers are better off for it.