NAIFA Statement on the Expected DOL Proposal to Redefine Who Is a Fiduciary

NAIFA President-Elect Jules Gaudreau, ChFC, CIC, said:

NAIFA members provide guidance to consumers about their retirement investments, including investments in IRAs, 401(k) accounts, and other assets invested to produce retiree income. NAIFA is concerned that a rule that would endanger the business model that has allowed NAIFA members to successfully help their middle-market investor clients for decades would very possibly harm the people it is designed to protect.
“While we have not seen the new proposed rule, the White House report states commission based compensation models create inherent conflicts of interest.  Wrap fees don’t serve all clients well, and charging fees for assets under management can also create conflicts of interest. The bottom line is there is no one size fits all approach that will work for all investors. Based on the recent assertions by the Administration, we believe the likely result of the pending DOL regulation will be that professional investment guidance for retirement savings will become more expensive or not available at all for small accounts or individual plan participants. Middle- and lower-market investors would have a hard time finding wealth managers willing to work with them and they would be left without any professional guidance to secure their financial future.
“NAIFA members are highly regulated under the suitability standard of care. Suitability, as enforced by the Financial Industry Regulatory Authority (FINRA), is a very robust standard, governed by no fewer than six FINRA rules and more than a dozen Regulatory Notices and Notices to Members.
“As the OMB reviews this proposal, NAIFA strong advises that any new DOL rule protect the ability of millions of Americans to continue to receive low cost investment guidance about their retirement accounts. Congress also needs to ensure that  the SEC and DOL rules do not create conflicting standards for those offering investment information or advice.”
About NAIFA: Founded in 1890 as The National Association of Life Underwriters (NALU), NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every Congressional district in the United States. NAIFA members assist consumers by focusing their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. NAIFA’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members.