“Since its partial implementation in June, the fiduciary regulation has harmed small and moderate retirement savers by restricting or eliminating access to retirement products and services,” Kiernan said, “creating an advice gap for those most in need of help. Its bias against commission-based arrangements restricts consumer access to annuities—the only product in the marketplace providing guaranteed lifetime income.
“Wisely,” she added, “the Labor Department has delayed implementing the regulation’s remaining provisions until July 1, 2019. The delay will provide sufficient time for the department to complete its examination of the regulation and determine its next steps.”
Both the ACLI and the Life Insurance Council of New York support an approach that applies more broadly. “We support reasonable and appropriately tailored rules that require all sales professionals to act in the best interest of their customers. To that end, we encourage the [New York State Department of Financial Services] to work with other state insurance regulators, the Labor Department, the SEC, Finra and Congress on a uniform standard of care for investment advice,” Kiernan said. “A collaborative and harmonized regulatory approach would ensure all consumers receive retirement savings information and related financial guidance from financial professionals acting in their best interest, regardless of the retirement products they purchase.”
Insurers would also be required to develop and maintain procedures to prevent financial exploitation of consumers, under the New York state proposal.
The National Association for Fixed Annuities, which along with the ACLI is battling to vacate the DOL rule in court, is no fan of the New York proposal either. “There is great uncertainty about what the final contours of the federal rule will be, not to mention what the [National Association of Insurance Commissioners’] best interest model regulation will look like,” said NAFA Executive Director Chip Anderson. “We are concerned that the New York State Department of Financial Services is moving faster than is warranted and that a resulting patchwork of possibly conflicting standards might have the unintended consequence of limiting product choices for consumers.”
While the New York FPA’s Kamboh would like to see fiduciary standards, rather than just the lower suitability standards the state is amending, she—like so many investment advisors and brokers—would prefer a uniform, national “best interest” standard rather than individual state rules. “It’s just not good for productivity or consumer protection to have a lack of uniform regulation state by state,” she added.