Nine Out of Ten Americans

Mar 4, 2024

More than 90% of Americans now live in a state that has adopted a best interest standard for annuity sales.

That’s right — nine out of ten Americans are covered by consumer protections that ensure financial professionals are acting in the consumer’s best interest. This is exactly what people need as they plan for a secure retirement.

What Americans don’t need is the Department of Labor’s strict fiduciary-only proposal that will restrict their retirement options. The DOL tried to advance a similar fiduciary-only package before. That rule was vacated by a federal court in 2018. But not until more than 10 million American workers’ accounts with $900 billion in savings lost access to professional financial guidance, according to a 2018 Deloitte study.

The DOL should abandon its latest proposal. So much has changed to help retirement savers since the last time it tried this.

  • The National Association of Insurance Commissioners updated its model regulation on annuity transactions. In May 2020, Iowa became the first state to adopt these enhanced consumer protections. Since then, 43 other states led by Democrats and Republicans have adopted similar measures with California being the most recent. Building on this momentum, the remaining states are expected to adopt related measures to protect their citizens by year end.
  • In June 2020, the Securities and Exchange Commission’s Regulation Best Interest went into effect. Reg BI aligns with the actions by the states. It requires broker-dealers to act in the best interest of their retail customers and not place their own interests ahead of the customer’s interests.
  • Congress passed retirement legislation with overwhelming bipartisan support in 2019 and 2022. These bills made it easier for workers to access guaranteed lifetime income as part of retirement savings plans and simpler for savers and retirees to utilize annuities. The legislation known as SECURE and SECURE 2.0 were signed into law by Presidents Trump and Biden.

With these bills, Congress and the Administration reaffirmed the importance of lifetime income as an option for retirement savers. Most workers do not have access to traditional pensions anymore. Increasingly, Americans are looking to annuities to provide guaranteed lifetime income. Annuity sales soared to record highs the last two years.

The DOL’s proposal makes it harder to access lifetime income. The premise of the proposal is bad enough. But the timing is terrible. More than 4.1 million Americans are turning 65 each year through 2027. Now is certainly not the time to limit people’s options for retirement.

But it is certainly time for the DOL to withdraw its fiduciary-only proposal.

Susan K. Neely

Susan K. Neely is the President and CEO of the American Council of Life Insurers (ACLI), the nation’s leading trade association determined to help families live better lives by achieving financial security and certainty. As president and CEO, Neely drives public policy and advocacy on behalf of ACLI’s member companies that represent 93 percent of industry assets and serve 90 million families.