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Advocacy in action blog

Bradford Campbell, a partner with the law firm Faegre, Drinker, Biddle & Reath, testified today on behalf of NAIFA and several other industry organizations at the U.S. Department of Labor’s Administrative Hearing on the Proposed Class Exemption Regulation “Improving Investment Advice for Workers & Retirees.”

Campbell suggested significant modifications to DOL’s proposed regulation are needed to ensure it preserves consumers’ “essential access and choice to insurance and annuity products” and avoids problems that led to DOL’s previous fiduciary rule being struck down by a federal appeals court.

NAIFA and other industry groups generally support the DOL’s approach to creating a prohibited transaction exemption (PTE) for financial professionals working with retirement plans that preserves different business models, allowing agents and advisors to offer proprietary products and receive commissions as compensation, for example.

The proposal, however, fails to adequately differentiate between insurance and annuity transactions and securities transactions. “For insurance and annuity transactions that do not involve securities, the conditions of the proposed class exemption simply do not fit with the basic structure of insurance regulation,” Campbell said. DOL should revisit the proposed regulation “using the NAIC model rule on annuity recommendations as a guide.”

NAIFA also agrees with testimony at the hearing offered by ACLI, SIFMA and other industry partners. The DOL has made a good effort to align this proposal with the SEC’s Regulation Best Interest, but needs to address distinctions between “sales” and “advice” as well between insurance and securities distribution. When DOL works out these issues, NAIFA is confident the regulation will bolster protection for retirement savers and ensure they still have full access to the professional services and products they need.