The insurance industry really doesn’t like the DOL’s proposed rule

investmentnews.com:

The Biden administration has singled out annuities in the DOL’s proposed fiduciary rule, and the stakes are high for independent insurance agents.

In the long-awaited proposal released Tuesday, the Department of Labor explained that financial professionals who make one-time recommendations for rollovers from 401(k) plans to annuities will not get a free pass on fiduciary status. Aspects of the proposal echo those of a 2016 rule in the late days of the Obama administration — one that was dismantled in court two years later and replaced by a more industry-friendly rule in the Trump era.

The proposed changes will almost certainly make it more difficult to sell annuities via 401(k) rollovers.

In comments Tuesday, President Joe Biden called out annuity sales in particular, noting that some advisors are “putting their self-interest ahead of their clients’ best interest. And they’re scamming Americans out of hard-earned money.”

The industry’s reaction was immediate. Even before the text of the actual rule proposal and amendments to several prohibited transaction exemptions were published, trade and lobbying groups issued statements rebuking the administration. The Insured Retirement Institute said in a statement that the DOL would “needlessly cause millions of lower- and middle-income workers to lose access to the financial advice they need.” The American Council of Life Insurers said that Biden conflated “legitimate retirement costs with junk fees,” which “is a scare tactic to push regulations that will hurt Americans in need of greater financial certainty.”

Fiduciary status is a cumbersome title, lawyers noted. Advisors subject to it can’t receive compensation tied to products, unless they use one of several prohibited