Momentum Building for Best Interest
In certain parts of Texas, they’re probably still celebrating Baylor’s triumph this spring at the Final Four. The Bears became the first men’s NCAA Division I basketball champion from Texas since Texas Western (now the University of Texas at El Paso) captured the crown in 1966.
Now Texans from Waco to Waxahachie, Higgins to Houston, and all across the Lone Star State have a new reason to celebrate. And they don’t have to be basketball fans to appreciate this victory.
Texas Governor Greg Abbott recently signed a best interest annuity law that is a huge win for Texas savers. Championed by Texas House Insurance Committee Chairman Dr. Tom Oliverson and Senate Business & Commerce Chairman Kelly Hancock, the law enhances the standards financial professionals must follow while ensuring that individual savers maintain access to, and information about, annuities, the only financial product in the marketplace that can provide guaranteed lifetime income.
Texas is the 12th state with a new law or rule that incorporates the enhanced consumer protections in the National Association of Insurance Commissioners’ (NAIC) updated model regulation on annuity transactions. Building on this momentum, several other states are considering similar measures to protect their citizens.
The actions in the states also closely align with the Securities and Exchange Commission’s Regulation Best Interest, which took effect last year. And, unlike a fiduciary-only approach, these measures make sure savers have the right to choose who advises them, and that savers can access information about different choices for long-term security through retirement.
With these enhanced state and federal consumer protections, savers can rest assured that financial professionals must act in the consumer’s best interest when offering recommendations about retirement savings products, including annuities. The U.S. Congress reaffirmed the importance of lifetime income when it passed legislation in 2019 that made it easier for employers to include annuities in workplace retirement plans. These protections safeguard consumers while also ensuring that middle- and working-class families will maintain access to easy-to-understand financial information.
More states should follow the lead of Texas with this sensible consumer protection. Then more consumers across America looking to protect their family’s financial future will benefit from a best interest standard of care, no matter where they reside.
(Danny O’Connell, NAIFA-TX President, is CEO of Next Level Insurance Agency in Addison, Texas)
(Jennifer Cawley, JD, has been the Executive Director of the Texas Association of Life and Health Insurers (TALHI) since 2008. Ms. Cawley has nearly 25 years of experience working in and around the Texas Capitol, both as general counsel for state senators and as a regulator at the Texas Department of Insurance.)