“Researchers found that brokers earn higher commissions for selling ‘inferior annuities, in terms of higher expenses and more ex-post complaints’ and that ‘variable annuity sales are roughly five times more sensitive to brokers’ financial interests than investors,” the groups wrote.

The study also found that the now-defunct DOL fiduciary rule curbed significant conflicts, “driving down the sales of high-expense variable annuities ... as sales became more sensitive to expenses and insurers increased the relative availability of low-expense products,” the groups said.

The DOL indicated in April that its current rule may be just placeholder for broker-dealers, insurers, variable annuities companies and sales professional while the agency re-examines rollover advice. Future actions may include “amending or revoking some of the other existing class exemptions available to investment advice fiduciaries,” the DOL said.

“We believe such continued efforts are needed to close legal loopholes that would otherwise enable firms to evade appropriate application of the fiduciary duty,” the groups said.

They also credited the agency with identifying specific practices that could harm retirement investors and telling firms they must work to avoid practices such as paying incentives and using quotas, bonuses, prizes and performance standards, which can undermine compliance with the best interest standard.

“We ask that the department consider identifying other problematic compensation structures, as well, such as forgivable loans and deferred compensation plans that are tied to expectations that the investment professional meet certain production thresholds," the letter said.

The groups also asked that DOL step up its call for firms to increase monitoring of certain investments that are prone to conflicts of interest, such as proprietary products and principal-traded assets and complex investments. 

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