Federal regulators are using enforcement, tougher proposals and investor alerts to crack down on high-commission variable annuity sales, including “replacement” sales that generate high commissions and replacement penalty fees.
The insurance industry is battling back. In a self-published op-ed published on Medium.com, ACLI President and CEO Susan K. Neely came out swinging against the Maryland fiduciary standard for brokers and agents.
“The problem comes with the fact that the bill in Maryland would make every financial professional who sells an annuity a 'fiduciary' of the customer. This would end commission-based sales because fiduciaries are generally not allowed to represent both the buyer and seller in the same transaction,” Neely said.
"If financial firms are forced to move to a model where the only way a consumer can get financial advice is if that consumer pays a fee to a financial professional year after year out of their own pocket, then lower- and middle-income consumers—everyday Americans—are far less likely to be able to consider all their options for their own retirement needs. It’s also unfair to consumers who don’t want a fee-based arrangement where the annual charges can become costly over time,” she added.