Big ‘I’ Agents Raise Concerns about DOL Fiduciary Rule

Earlier today, Big “I” members from all 50 states visited Capitol Hill in support of various legislative measures, including efforts to reverse or amend the U.S. Department of Labor (DOL) fiduciary rule released last week. The new rule tightens conflict of interest requirements under the Employee Retirement Income Security Act.

Questions abound about how the DOL will implement the rule and how it will impact agents and brokers. In an effort to explain some of the threshold issues that arise in the new rule, Big “I” staff has prepared a preliminary explanatory guide.

The rule is far reaching and will have a profound impact on certain sectors of the insurance industry. As the Q&A document notes, the new regulation requires any person who provides guidance to clients about certain retirement-related investments—such as IRAs, 401(k)s and in some cases HSAs—to adhere to a fiduciary standard of care.

Due to the complexity of the rule and the potential for litigation, it will likely take years before realizing some of its consequences. As such, how some parts of the rule will apply in practice—as well as its full impact on agents and brokers—remains to be seen.

One thing is for certain: The rule’s wide range of requirements will increase oversight costs and legal exposure for independent agencies and insurance companies that offer covered retirement products. The increased costs and exposure will likely limit access to advice for some consumers. Overall, the rule will make retirement advice more costly and complicated.

As agents and brokers prepare for the implementation of the fiduciary rule, which will phase in beginning in April 2017, the Big “I” will continue to work with Congress to address related concerns.

Jennifer Webb is Big “I” federal government affairs counsel.