Serving in the Best Interest
The Department of Labor received more than 19,000 comment letters about its proposed fiduciary-only package. People clearly care very deeply about the DOL’s proposal, which threatens to erect a barrier between low- and moderate-income savers and financial inclusion.
The DOL’s proposal also ignores the strong consumer protections overseen by state insurance commissioners. Many commenters cited this oversight, including The National Council of lnsurance Legislators (NCOIL) and a diverse group of state trade associations for the insurance industry.
“Under this state-based legislative and regulatory structure governing the manufacture, distribution, and sale of retirement related financial products, tens of millions of Americans have been able to receive sound assistance, products, and services from financial professionals who have consistently served the best interest of customers,” NCOIL wrote.
All 50 states are members of NCOIL, which includes legislators serving on their states’ insurance and financial institutions committees. Many of those legislators were integral in getting 41 states since 2020 to enact new laws or regulations in accordance with the National Association of Insurance Commissioners best interest enhancements to its annuity transactions model regulations.
Together with the Securities and Exchange Commission’s Regulation Best Interest, the state measures address potential financial conflicts without denying those with low and moderate savings access to and guidance and information about a variety of financial savings products.
Also supporting these efforts are state insurance trade associations, which represent the life insurance and annuity industries throughout the country. Representatives from trade associations from coast-to-coast wrote to the DOL, strongly urging it to drop the fiduciary-only proposal.
Trade associations from states across the political spectrum, including California, New York, Florida and Texas, signed the letter, noting that “State regulators across the country are already protecting consumers against conflicts of interest and doing so by also safeguarding consumer access to retirement security options.”
It’s as clear in Austin as it is in Albany: state-based insurance regulation protects consumers while ensuring that all savers also retain access to the guaranteed lifetime income from annuities. It is time for the DOL to recognize this and drop its harmful fiduciary-only proposal.