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IRI proposes changes to the Department of Labor’s Fiduciary Rule

Brian Anderson

WASHINGTON, D.C. – The Insured Retirement Institute (IRI) recently submitted a comment letter to the Department of Labor (DOL) regarding the DOL’s proposed fiduciary rule. The IRI letter details numerous concerns regarding unintended consequences from the proposed rule, including blocked access to retirement planning advice for lower- and middle-income retirement savers and limited choice for consumers regarding retirement products including annuities.

“Financial professionals should work in the best interest of their clients when recommending investments to retirement savers,” IRI President and CEO Cathy Weatherford (shown at right) said. “But we are deeply concerned that the extensive requirements contained within this proposal would have serious and far-reaching unintended consequences for millions of American retirement savers. This includes limiting consumers’ access to annuity products at a time when we should be encouraging and promoting lifetime income strategies as a source of retirement income that cannot be outlived. The rule should also take into consideration the tremendous value financial professionals offer their clients, leading them to be better prepared for their retirement years.”

In its letter, IRI outlines important revisions to enable the DOL to establish a best-interest standard while preserving consumers’ access to retirement planning advice and retirement income products. The letter also provides an operational impact assessment conducted by Deloitte & Touche to examine disruption to the annuity market resulting from the proposal.

“The rule should be restructured in a way that advances retirement security and preserves consumers’ choice on how to plan for retirement, invest their savings, and meet their financial goals,” Weatherford said. “DOL officials have indicated that they are willing to make changes. We provide these comments to be constructive and offer revisions to help the DOL in this effort. However, absent significant changes, the DOL proposal will result in fewer choices for retirement savers as well as restricted and limited access to retirement planning advice, which will make saving and planning for retirement more difficult for millions of Americans.”


Proposed Definition of “Fiduciary”

The proposal contains an overly broad definition of a fiduciary that would deprive retirement savers of access to retirement information and inappropriately limit the availability of advice sources. IRI’s operational impact assessment conducted by Deloitte & Touche determined that this significant definition expansion will create operational risk consideration and obligations that could lead annuity providers to restrict or end certain types of communications, products and services that consumers rely on for their financial security in retirement. To ensure consumers can continue to receive retirement planning services and have a full-array of retirement products available to them, IRI recommends enhancing the investment education carve-out as well as adding a separate carve-out to accommodate transactions in which there is no reasonable expectation that the advice is fiduciary in nature.


Proposed Amendment to PTE 84-24

IRI is concerned that the amendments to Prohibited Transaction Exemption (PTE) 84-24 as currently proposed will limit the availability of lifetime income options for retirement savers. In the context of the IRA market, the exemption currently would only apply to fixed annuities. Variable annuities, like fixed annuities, offer guaranteed lifetime income features, which are a primary driver of their use by consumers. To ensure a continued robust market of lifetime income options for consumers, IRI has requested the proposal be revised to make relief under the exemption available to all annuities.


• See also: Dr. Jack Marrion, Americans for Annuity Protection attack DOL arguments for fiduciary-only rule

Proposed “BIC” Exemption

The proposed “Best Interest Contract” (BIC) exemption is currently unworkable and must be revised to avoid disruption to the availability of annuities. The BIC exemption as proposed fails to recognize that different products use different fee structures to account for the benefits the product delivers to consumers. The exemption must be revised to account for the benefits products offer consumers, or the rule will skew the market by favoring some products regardless of their overall benefit to consumers.

The BIC exemption also imposes exceedingly burdensome, expensive, and duplicative disclosure requirements that offer no meaningful benefit to consumers while potentially overwhelming and confusing them. In many cases these requirements conflict with current SEC requirements. As a result of these onerous and unworkable requirements, many retirement savers – including those at lower and middle-income levels – will be forced into low-service and do-it-yourself Internet accounts that provide little-to-no meaningful personalized advice. To ensure continued access to retirement planning advice to these savers, IRI recommends eliminating some of these requirements and replacing others with existing and extensive SEC disclosure requirements.

Proposed Implementation Timeline

IRI recommends that the DOL extend the proposed implementation period to three years to ensure that the industry has sufficient time to develop the necessary compliance processes and minimize disruptions to the market and customers. The DOL has proposed an eight-month implementation period, but IRI notes the DOL provided service providers two years to implement new disclosure requirements, which were much smaller in scale. The IRI operational impact assessment conducted by Deloitte & Touche indicated that meeting the requirements and conditions in the proposal will require massive informational technology redesign and buildouts, which would take several years to complete.


• Click here to view IRI’s comment letter.

• Click here to view IRI’s operational impact assessment conducted by Deloitte & Touche.

• Click here to view IRI’s 10 Benefits of Working with a Financial Professional Fact Sheet.


• See also: Dr. Jack Marrion, Americans for Annuity Protection attack DOL arguments for fiduciary-only rule


About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is the leading association for the retirement income industry. IRI proudly leads a national consumer coalition of more than 30 organizations, and is the only association that represents the entire supply chain of insured retirement strategies. IRI members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. As a not-for-profit organization, IRI provides an objective forum for communication and education, and advocates for the sustainable retirement solutions Americans need to help achieve a secure and dignified retirement. Learn more at www.irionline.org.



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