Reassurance, Not Restrictions
Rising interest rate hikes. Inflationary pressures. Job insecurity.
Navigating today’s volatile economy isn’t easy. That’s why many Americans turn to financial professionals for help.
More than 80% of Americans feel the guidance they receive from financial professionals helps them feel reassured during difficult economic times.
Public policy should always be aligned to support Americans as they plan and prepare for their family’s financial security. Unfortunately, the U.S. Department of Labor (DOL) may be taking another try at a regulation it got so wrong in 2016.
The DOL just sent a new proposal to the Office of Management and Budget for review. If it is anything like the fiduciary-only regulation in its last attempt, it will make it harder for Americans to achieve long-term financial security and shouldn’t see the light of day.
Fiduciary advisors commonly require account holders to invest at least $100,000, which is more than most working Americans have in retirement savings. If a fiduciary-only regulation is enacted, it would cause nearly 13 million households to lose access to a financial professional.
It would also exacerbate the racial savings gap since the median retirement savings for Black and Hispanic households is less than $30,000.
Life insurers believe that every hard-working American – no matter their age, job, gender or race – deserves the opportunity to achieve financial security through retirement. A proven path to financial security is through the guaranteed lifetime income of annuities.
Very few companies offer traditional lifetime pension benefits to new employees. But with an annuity, a worker can create their own reliable income stream like a pension.
Many annuities are sold on a commission basis, and the average income of an annuity owner is $70,000. But another fiduciary-only regulation would eliminate the option for people without the means to hire a fiduciary to work with financial professionals compensated on a commission basis.
This would be short-sighted and unfair. Americans strongly value the freedom to choose who they work with about their financial options. A Morning Consult survey finds that 91 percent of respondents prefer the option to work with any type of financial professional who is offering products and services that meet their needs.
If the DOL’s proposal is another strict fiduciary-only regulation, it should be abandoned. Instead, the DOL should work with life insurers and other interested parties to ensure Americans of all means have the opportunity to achieve financial certainty throughout retirement.