The Big “I” submitted a comment letter to the U.S. Department of Labor (DOL) that outlines how the fiduciary rule negatively impacts association members and limits consumer access to retirement advice.
The fiduciary rule is a complex federal regulation that tightens conflict of interest rules under the Employee Retirement Income Security Act. It requires insurance agents and brokers who give guidance about certain retirement investments, including some annuities and health savings accounts (HSAs), to adhere to a fiduciary standard of care.
The DOL is currently reviewing the rule for potential changes and asked stakeholders to provide new information on its impact since it began taking effect June 9. In July, the Big “I” surveyed members in 25 states to better assess the rule’s impact on independent insurance agencies. The survey was part of the association’s ongoing regulatory and legislative advocacy efforts related to the rule.
The survey found that the DOL rule is harming independent insurance agencies and small businesses across the country. Almost half of survey respondents who sell impacted products indicated that as a direct result of the rule, they have already exited or plan to exit the market on or before Jan. 1, 2018. This exodus of independent insurance agents from the market will limit consumers’ ability to have a trusted adviser who is able to assess all their financial and insurance needs holistically.
According to the survey:
- The rule is proving too onerous, costly and complicated for small businesses to achieve compliance.
- Some insurance agencies will stay in the market, but will change the way they do business in a manner that limits access to financial advice—such as no longer servicing clients with lower account balances.
- Agencies are uncertain about how the rule impacts HSAs, referrals and fixed annuities.
- Some agencies are observing increased costs related to obtaining retirement services and advice for their employees.
The Big “I” conveyed this information to the DOL and asked it to amend and clarify the rule to limit its negative impacts on independent insurance agents and brokers. Meanwhile, the DOL issued a new FAQ document.
Jennifer Webb is Big “I” federal government affairs counsel.