Neely also told DOL officials today that the proposed rule seems at odds with actions taken by Congress to close the retirement savings gap in part through expanded access to annuities.
The proposal “undervalues the essential role annuities play in providing certainty for middle-income retirees. With an option for protected lifetime income and a strong regulatory framework of consumer protections in place, it is no surprise that annuities are a product sought and used by middle-income Americans.”
The median household income among annuity owners is $76,000. The median household income in the U.S. is $63,000, she said.
“Our ask is clear: remove this proposal in its entirety and focus instead on increasing access and certainty for American workers saving retirement,” Neely concluded.
But consumer groups and the AFL-CIO said the new rule is necessary to eliminate costly conflicts of interest.
Micah Hauptmann, director of Investor Protection at the Consumer Federation of America, said that many retirement investors reasonably expect and believe that the financial experts they turn to will act in their best interest, because the industry and their trade groups sell their services that way.
“If retirement investors beliefs and expectations about the relationships they’re in and the services that they receive are misplaced it’s because everything that financial professionals and their firms do is designed to send the message that they’re in relationships of trust and confidence with investors and they provide advice in investors’ best interest that should be relied on,” Hauptmann said.
“From the titles they use to how they describe their services and relationships and most importantly, how they function, any reasonable person would view these as trusted advice relationships,” he added.
For example, Hauptmann said ACLI has repeatedly highlighted in testimony and marketing materials “the benefits of using a financial advisor….”
The trade group has also compared the value of commission-based and fee-based advice, “suggesting that the only difference is the method of payment for the advice, not that they are different services and relationships altogether,” added Hauptmann, who said the new proposed DOL rule will even the playing field so consumers aren’t misled.