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November 15, 2023

Brad Campbell Comments on Distributor Reactions to DOL Fiduciary Rule With Life Annuity Specialist

In “Annuity Intermediaries Left in the Lurch Under Fiduciary Rule Proposal,” Life Annuity Specialist turned to benefits and executive compensation partner Brad Campbell for insight on the Department of Labor’s (DOL) proposed fiduciary rule and the oversight that independent marketing organizations (IMOs) are to provide affiliated agents who will be deemed investment advice fiduciaries.

That classification will mandate detailed special conditions, disclosures and process requirements — for example, on how to document a rollover from a 401(k) retirement plan to an annuity — that will require the assistance of a supervisory entity, according to Campbell. “Who’s going to fill the gap of helping those producers understand what they have to do, help them do it, but in a way that doesn’t cause them” — the IMOs — “to themselves become fiduciaries?” he asked.

Campbell added that the DOL continues to adhere to its previous position that independent marketing organizations are not financial institutions — organizations that are expected to function in a supervisory role to fiduciary advisers. “Even as the DOL implies that the role for fiduciaries will probably be large in terms of assisting producers, assisting carriers, or both, it goes out of its way to say, ‘But we don’t want you’” — the marketing organizations — “‘to be financial institutions in your own right,’” Campbell said.

Campbell thinks IMOs might ultimately take on a supervisory role if the rule goes into effect as currently framed. He also warned that the DOL’s proposal would make meeting consumers’ needs much more difficult.

“This isn’t one where one group wins or loses,” Campbell concluded of the rule’s impact on insurers, intermediaries and agents. The industry “as a whole is facing some big-picture problems under the proposal as written.”

The full article is available for Life Annuity Specialist subscribers.

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