Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor
Seal of the Securities and Exchange Commission

Regulation and Compliance > Federal Regulation > SEC

SEC Custody Rule Plan Would Hurt Annuity Access: IRI

By Melanie Waddell

X
Your article was successfully shared with the contacts you provided.

The Securities and Exchange Commission’s new custody rule plan would “inadvertently impair” RIA clients from obtaining lifetime income products — including annuities — through advisors, according to the Insured Retirement Institute.

How? The SEC’s plan “imposes stringent requirements related to custody of investor assets on products under which no investor assets are actually in the custody of the RIA or the insurer,” which includes annuities, Jason Berkowitz, IRI’s chief legal and regulatory affairs officer, told ThinkAdvisor on Tuesday in an email.

The SEC’s proposed Safeguarding Advisory Client Assets rule would broaden the application of the current investment advisor custody rule beyond client funds and securities to include any client assets in an advisor’s possession or when an advisor has the authority to obtain possession of client assets.

IRI told the SEC in its comment letter that the plan should be altered to include an “exception to the proposed rule’s qualified custodian requirement that effectively modernizes current SEC guidance that allows insurance companies to act in lieu of a qualified custodian in connection with all contract types.”

The comment period on the plan expired Monday. The agency has received significant pushback on the proposal.

Insurance companies, IRI explained, “own underlying contract assets for annuities they issue, and companies are subject to strict state insurance regulations and several federal regulations to protect consumers.”

Providing an exception “for insurance companies to act in lieu of a qualified custodian in connection with a contract would put insurance companies on equal footing with the mutual fund industry under the proposed rule,” the trade group said.

“The SEC’s acknowledgment of the similarities between insurance companies and mutual fund transfer agents in the custody context necessitates consideration by the SEC as to why the two receive disparate treatment under the proposed rule — with insurance companies relying on limited no-action guidance from the staff and mutual fund transfer agents being granted a specific exception by the SEC in the custody rule,” IRI wrote.

(Photo: Diego M. Radzinschi/ALM)

Melanie Waddell

@Think_MelanieW

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.