Time to Embrace the Right Option

Soaring prices on gasoline, groceries and other goods continue to pressure middle-income Americans. With 40-year high inflation, several economists predict the country is headed toward a recession.

During periods of economic upheaval, many Americans turn to financial professionals for support. Indeed, a recent survey by Greenwald Research shows that 81% feel the guidance they receive from financial professionals helps them feel reassured during difficult economic times.

These findings emphasize the danger of a proposal under development by the U.S. Department of Labor (DOL) likely would eliminate the help lower- and moderate-income retirement savers receive from financial professionals who receive one-time commissions. Instead, only those with sizable accounts and higher incomes would be in position to work with fiduciary advisers.

It’s time to embrace a different option.

In the past two years, 27 states have adopted new laws or rules that incorporate the enhanced consumer protections in the National Association of Insurance Commissioners updated model regulation on annuity transactions. Several more states are working on similar measures.

The new laws and rules also align with the Securities and Exchange Commission’s Regulation Best Interest. Together, the state and federal efforts provide robust protection for small- and moderate-income savers including under-resourced communities.

Importantly, they also ensure everyone retains access to long-term security through retirement with annuities, the only product in the marketplace that can provide savers with guaranteed income for life, along the lines of a traditional pension. Conversely, a fiduciary-only approach would harm moderate-income savers by eliminating the option of working with financial professionals on a one-time commission basis. The Greenwald survey found that middle-income retirement savers would be very concerned about a regulation that restricted access to the professional financial guidance they want and need.

We’ve been down this path before. In 2016, the DOL adopted a fiduciary-only regulation. In 2018, a federal appeals court struck such overreach down.

It comes down to the fact that financial protections shouldn’t limit financial options, and they don’t need to do so thanks to the effective alternative taking hold across the country on behalf of consumer protection and the ability of all Americans to protect their retirement savings.