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October 26, 2015 at 01:03 PM
Pouring over tens of thousands of pages of comments, articles and studies about the Department of Labor’s Uniform Fiduciary Rule has finally brought some clarity.
There were days when we wondered!
Americans for Annuity Protection advocates for the annuity consumer’s right to a well-regulated, competitive and comprehensive annuity marketplace. For some time, we’ve observed that most consumer groups who discuss annuities or have been vocal about the DOL Rule really understand very little about annuities and the annuity marketplace.
So, we decided to band together a group of industry experts that knew annuities from the inside out — how products are developed, distributed and regulated. Collectively, we have almost 100 years of marketing, compliance, product development and sales experience with annuities. With that intricate knowledge and expertise, it is not at all difficult for us to assess the pros and cons of regulation and identify what effects it will have on consumers — good and bad.
The DOL Rule as proposed is harmful to consumers.
The DOL has spent years preparing the messaging, and the public relations work that has gone into “selling” their Rule has been impressive. In the end, the PR is about the following assumptions:
* Consumers deserve a uniform standard of care in the IRA marketplace;
* Consumers expect advice that “serves their best interest;”
* Consumers expect little or no conflicts; and,
* Consumers expect any conflicts to be acknowledged and disclosed in detail.
Its seems that the majority of those for and against accept the assumptions as truths. After all, every mother deserves their child’s love, right? Well, no, not every mother and not every mother always. Let’s take these assumptions one at a time.
Consumers deserve a uniform standard of care
Uniformity can be good — who wouldn’t love it if all cell phones and Kindles had the same chargers. But, with uniformity you often give up choice and competitive advantages.
With different charging mechanisms a phone can be cheaper, lighter, charge faster, or have a longer battery life.
Consumers may mix and match features and/or value and choose the phone that is best for them and their lifestyle. Likewise, with different standards of care, consumers can choose the relationship and buying experience that suits them and their pocketbook.
Proponents also claim that uniformity creates a level playing field which is better for the customer. But can you really create a level playing field when you retrofit two different areas of the law? This Rule takes fiduciary law (based on the laws of trust that date back to merry old England in the 1500s) and slaps it on top of insurance law (based on the laws of agency).
The laws of Trust are based on a relationship created at the direction of an individual, in which one or more persons hold the individual’s property and is subject to use and protect it for the benefit of others or the individual.
