April 19, 2018
This new rule appears to fall short of its intended result. (protecting consumers from commission driven sales of financial product without concern over the best interest of the retail consumer) Recommendations of fixed annuities especially Equity Index Annuities to retirement plan participants and IRAs (“retirement investors”) is where it seems that most of the abuses happen. The rule as it reads appears to only regulate “conduct for broker-dealers and natural persons who are associated persons of a broker-dealer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer” Registered Representatives and Investment Advisory Representatives tend to be significantly more aware and in tune with the philosophy of acting as a fiduciary under the SEC’s proposed new fiduciary definition. This means that insurance agents and especially independent insurance agents will be open to engage in a much less prudent process in making those recommendations on retirement assets. It also does not dampen the motivation for insurance agents to sell products to collect “their commissions” whether the product is in the best interest of the client or not it will become more prevalent . Insurance agent that are not securities licensed in any way will need something to motivate them to act or comply with conditions of a fiduciary standard or this will only motivate more individuals to not have a securities license.
If “Fixed Equity Index Annuity” products and the non-securities licensed agents who sell them are not regulated or held to the same standard as investment licensed agents the effort to help the consumer will fall far short.
Maxwell A. Coulliette, CFP®, CLU®, ChFC®, CRPS®
1225 E. Ft. Union Blvd, Suite 350
Cottonwood Heights, UT 84047