The effort to revive a fiduciary rule similar to one vacated by a federal court in 2018 would limit consumers' choices while providing no meaningful protections.
ARLINGTON, Va., Oct. 10, 2023 /PRNewswire-PRWeb/ -- Kevin Mayeux, CAE, CEO of the National Association of Insurance and Financial Advisors (NAIFA), told the Biden Administration in a meeting that the Department of Labor's (DOL's) current efforts to revive a fiduciary-only regulation for financial professionals is unnecessary and likely to harm low- and middle-income consumers.
Speaking with officials from the Office of Information and Regulatory Affairs (OIRA) of the White House's Office of Management and Budget (OMB) on October 6, Mayeux explained that the regulatory landscape has changed significantly to provide greater protections to consumers since NAIFA engaged in litigation that struck down the DOL's 2016 Fiduciary Rule.
Since that federal appeals court ruling in 2018, the Securities and Exchange Commission has implemented and begun enforcing Regulation Best Interest (Reg BI), which requires broker-dealers and registered representatives to put their clients' interests ahead of their own. Additionally, forty states have enacted the National Association of Insurance Commissioners' (NAIC's) model regulation that creates a best-interest standard for annuity transactions.
In addition to the federal and state regulations, NAIFA members abide by a Code of Ethics that requires them to put their clients' interests first.
"NAIFA regularly meets with Administration officials to discuss issues important to financial professionals and the consumers NAIFA members serve," Mayeux said. "NAIFA members work in their clients' interests because it's the right thing to do and because it's good business. Backing that up is a strong slate of existing state and federal regulations. Additional action by the DOL at this time would create confusion for advisors and consumers without providing meaningful consumer protections. There is no need for the DOL's current fiduciary proposal, and it would very likely bring unintended consequences harmful to the consumers the DOL aims to protect."
"NAIFA supports all business models skilled financial professionals use to serve their clients," Mayeux continued. "A brokerage model with commissions works very well for many consumers while others are better served by fee-based models. The current landscape offers an array of choices that the DOL proposal would seek to restrict."
NAIFA is an advocacy partner of the Latin American Association of Insurance Agencies and the National African American Insurance Association, and Mayeux told the OIRA that a fiduciary-only rule would hit Black and Hispanic communities particularly hard, potentially increasing the racial wealth gap by 20% based on the size of IRAs.
"I would like to thank the Office of Information and Regulatory Affairs for meeting with us," Mayeux said. "NAIFA will continue to work with the Administration and members of Congress on behalf of financial professionals and the consumers who depend on them to oppose an unnecessary and potentially harmful DOL Fiduciary Rule."
ABOUT NAIFA: The National Association of Insurance and Financial Advisors is the preeminent membership association for the multigenerational community of financial professionals in the United States. NAIFA members subscribe to a strong Code of Ethics and represent a full spectrum of financial services practice specialties. They work with families and businesses to help Americans improve financial literacy and achieve financial security. NAIFA provides producers a national community for advocacy, education, and networking along with awards, publications, and leadership opportunities to allow NAIFA members to differentiate themselves in the marketplace. NAIFA connects with members in 267 different local areas between State Chapters, Local Chapters, and Local Affiliates. NAIFA members in every congressional district advocate on behalf of producers and consumers at the state, interstate, and federal levels.
Media Contact
Mark Briscoe, NAIFA, 703-770-8111, [email protected], www.naifa.org
SOURCE NAIFA
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