NAIFA P+P Legislative Forum

Members of NAIFA’s Government Relations Team – Diane Boyle, Judi Carsrud, Michael Gerber, and Gary Sanders – provided attendees at NAIFA’s Performance + Purpose conference in San Antonio an advocacy update at the event’s “Legislative Forum.”
DOL Fiduciary
The panel provided a timeline of NAIFA efforts to shape, delay, and ultimately overturn the Department of Labor’s fiduciary regulation that placed undue barriers between advisors and their clients and harmed the ability of Main Street advisors to obtain personalized advice and financial services.
“NAIFA met with the White House, we met with the DOL many times, we met with legislators,” Carsrud said. “Every avenue that was available to us, we took.”
The legislative advocacy included a focused and effective grassroots effort, which resulted in hundreds of letters to members of Congress and DOL urging DOL to get the rule right.
While these efforts helped delay the rule’s implementation and addressed some troubling aspects of early proposals, DOL eventually issued a final rule that retained unacceptable burdens placed on advisors and consumers. Undoing these measures required a lawsuit.
An industry consensus developed that the best place to file a suit was in the Northern District of Texas.
“Who has members who live and work in the northern district of Texas?” Gerber asked.
When other groups looked for associations to partner with, NAIFA was the only one who fit the bill, he explained. “Several groups approached NAIFA and we decided that a partnership with the American Council of Life Insurers was the best fit.”
Ultimately, the court ruled that the regulation was completely invalid, and on June 21, after a three-month delay, issued a mandate to affirm the ruling.
“At that time,” Gerber explained, “legally it was as if the rule had never been promulgated.”
The rule was defeated, Gerber said, thanks to the efforts of “our one-NAIFA family,” including NAIFA-National, NAIFA-Texas, and several NAIFA locals in northern Texas.
SEC Best Interest Standard
Members of the Securities and Exchange Commission, unlike legislators, are not subject to lobbying and do not accept PAC contributions. Yet, the commission’s actions have profound impacts on NAIFA members and their clients.
Several years ago, Sanders said, NAIFA decided to step up its level of engagement with SEC commissioners and staff to build relationships. The commissioners benefit because NAIFA leaders can talk about what advisors do on a day-to-day basis to help consumers. SEC commissioners are very interested in that perspective, and it is one that no other group is able to provide as clearly or effectively as NAIFA.
These relationships have grown in importance now that the SEC has proposed a best interest standard for advisors that includes restrictions on which financial professionals can and cannot use the title “advisor.”
NAIFA supports a reasonable best interest standard and has explained this to SEC commissioners. Being in favor of a standard “gets us a seat at the table” as the commission hammers out the details, Sanders said.
NAIFA submitted a comprehensive comment letter on the SEC proposal, which focused on the proposed title restrictions but also suggest additional smaller changes.
Senior Safe Act
NAIFA advocacy was instrumental in the passage of federal legislation that empowers insurance and financial advisors to serve the interests of their senior clients by acting as a first line of defense against financial fraud.
The Senior Safe Act, Sanders explained, encourages advisors to report suspected cases of fraud to their broker-dealers and financial institutions. The law is major benefit to older savers and investors who, according to numerous studies, are particularly vulnerable to fraud. The law shines a positive light on the industry and highlights an important service advisors can provide clients.
NAIFA worked with Congress to ensure that reporting is not mandatory and to protect advisors acting in good faith from potential liability.
Tax Reform
Tax issues are always top-of-mind in Congress, and taxes are obviously an important factor in the success of NAIFA members and the financial security of businesses, individuals, and families.
“We will never stop talking about tax laws,” Boyle told the Legislative Forum attendees.
Carsrud noted that the recent tax-reform law passed Congress and was signed into law following a very short process. NAIFA was very active in that process, but because the legislation moved so quickly, NAIFA’s previous initiatives to educate lawmakers on how tax laws affect NAIFA members and their clients were crucial.
The final tax reform package was a win for NAIFA members, as the law did not mandate “Rothification” of retirement plans and made no changes to the taxation of products NAIFA members sell.
Smaller Victories
Recent advocacy has also resulted in a number of what Boyle termed “smaller victories,” beyond the “Triple Crown” of the DOL rule, tax reform, and the Senior Safe Act.
One of these, Carsrud said, occurred when President Trump signed an executive order instructing the DOL to look for ways to bolster Americans’ retirement savings. NAIFA is and has been a strong supporter of government efforts to help workers better prepare for retirement. The executive order, Carsrud said, “is a good first step.” She also noted that NAIFA is working with members of Congress who are also looking at numerous small provisions to boost retirement planning.
IRS 199A, a Treasury Department regulation proposed in August, clarifies the tax-reform law’s treatment of taxpayers with income from “pass-through” businesses. The rule allows those with qualified business incomes from certain types of businesses, including insurance agents and brokers, to claim deductions even if that income exceeds an established threshold.
NAIFA worked with Treasury and the IRS to see that insurance agents would be exempted from the threshold limitation. Boyle noted that this was only a partial victory for NAIFA because those who sell investment products are not eligible for the exemption.
Sanders told attendees NAIFA state-based advocacy, working with the ACLI, has been generally successful in opposing proposals to create state-run retirement plans that would compete with the private sector. The problem with most of these plans, he said, is that they aim to increase availability of products and consumer access to them. These are not the real problems, Sanders explained, because NAIFA members and other advisors can offer retirement plans suitable for nearly any worker or small business. NAIFA supports legislation that creates marketplaces for private-sector plans, do not mandate employer participation, and emphasize financial literacy and retirement education.
The Influence of NAIFA
IFAPAC, NAIFA’s political action committee, is among the largest in the industry and demonstrates NAIFA members’ commitment to participating in the political process. The PAC cannot and does not “buy votes,” Boyle explained, but it lets members of Congress know that NAIFA members are committed to protecting their businesses and clients.
It is a misconception, Gerber explained, that IFAPAC favors one political party over the other. IFAPAC is bipartisan and in reality “supports candidates receptive to our issues and those supportive of our issues.”
Sanders told attendees that NAIFA’s Capital 50 Fund, a partnership between NAIFA and corporate supporters Northwestern Mutual, New York Life, and the Guardian, provides financial grants to successful NAIFA state advocacy programs to help them improve their efforts in state houses around the country. So far, 15 states have qualified for grants totaling $60,000. Sanders encouraged the remaining NAIFA state chapters to apply. “There’s money out there,” he said.
NAIFA has also spread its advocacy influence by working within numerous industry coalitions. It has joined with the ACLI on a variety of state and federal issues, including the DOL lawsuit and state efforts to opposed state-run retirement plans. NAIFA has also enhanced its influence and outreach by partnering with Women in Insurance & Financial Services and the National African American Insurance Association to advocate on behalf of those organizations when they share common interests with NAIFA.
  • Posted September 19, 2018 IN
  • Comments (1)

Jerry W. Peyton
IRS 590-B requires IRAs with certain investments to pay tax on gains within the IRA the year of the gains.
When gains are paid as disbursements the seniors must pay taxes again.
This is unacceptable for many reasons and goes against actions taken by President to make it easier for seniors to save for retirement.

Can you please discuss with President and help repeal this law?
9/23/2018 8:05:39 PM