New insurance advocacy group calls on DOL to withdraw rule

The Department of Labor’s proposed conflict-of-interest rule, which would require a fiduciary standard of care for advisors and brokers that recommend retirement investments to IRAs and most 401(k) plans, would impose vast new regulations on the insurance industry and brokers of their financial products.

That prospect raises the ire of the Americans for Annuity Protection, a newly launched non-profit advocacy working to extend the reach of fixed-income insurance products in workplace retirement plans.

Read: Opponents say fiduciary rule unworkable

A recently published policy paper by the group defends what it thinks are rigorous legal obligations the insurance industry already operates under to assure annuity recommendations are made in the best interest of clients.

“If this rule goes into effect as is, it will establish conditions that will keep ordinary consumers from getting the advice and assistance they so desperately need,” argue the authors of the paper.

“And instead, this will place more of Americans’ money in risky investments while sending more wealth into the already ample coffers of Wall Street firms.”

The paper calls on the DOL to withdraw the rule, arguing that the Securities and Exchange Commission “is the only agency Congress has authorized” to regulate products sold to retirement investors.

But insurance agents that sell annuities are licensed and regulated at the state level, leaving many annuity products outside of the SEC’s jurisdiction.

In calling for the DOL to withdraw its rule, the authors make no mention of the SEC’s limited jurisdiction over the insurance industry in the section of the paper that outlines the extent of oversight insurance agents operate under at the state level.