NAIFA Goes to the White House

NAIFA Goes to the White House

NAIFA - (National Association of Insurance and Financial Advisors)

On May 4, NAIFA President Juli McNeely and Past President Terry Headley, along with NAIFA staff and counsel, met with White House and key Department of Labor (DOL) representatives to discuss the DOL’s proposed fiduciary rule.  During the hour-long meeting, NAIFA expressed support for a workable best interest standard and outlined NAIFA’s areas of concern with the current DOL proposal. The meeting concluded with a commitment to a continued dialogue between NAIFA and the Administration.

 Representatives from the DOL provided a summary of the proposal and invited NAIFA to offer feedback.  Acting CEO Michael Gerber provided an overview of NAIFA, including our mission and member profile, and emphasized our representation of Main Street and promotion of ethical conduct for 125 years.

 We acknowledged the improvements from the 2010 withdrawn DOL proposal, and noted we have NAIFA members in the every Congressional district that can provide field information on the practical application of the proposed rule. We then introduced Juli and Terry as practitioners who would be able to provide examples of how they work with clients. We also noted that because they travel the country as NAIFA leaders, Juli and Terry would be able to share the experience of NAIFA members serving the middle market in a variety of different community settings.

 Juli described her small town and business clientele, and her fact finding and due diligence procedures. She provided examples of how her recommendation process is in her clients’ best interest. She also detailed her broker-dealer relationship, consumer protection procedures and compliance.  The DOL representatives wanted to know more about Juli’s selection of a broker-dealer, which allowed her to explain that it wasn’t compensation that motivated the change, but a desire for a broker-dealer with enhanced technology so that she could better serve her clients. She was also able to share the prolonged time it took to re-paper her clients because of compliance requirements and the challenges that this year-long process posed for her clients.

 Terry mentioned there appeared to be a focus on accumulation in the proposal, and emphasized that both the accumulation and long-term distribution phases of retirement planning need to be considered. He explained the services our members provide to small businesses and the need for encouragement by advisors for employers to set up retirement plans and for participants to contribute. He stressed that both the employer and employees need help with menu options and investment decisions. Terry explained longevity risk and how only annuities can address that risk and provide guarantee income for life.

 The DOL representatives asked many specific questions of Juli and Terry to learn more about the business practices of NAIFA members and seemed to understand that the rule will impact our members differently depending on their relationships with financial institutions (independent, affiliated or captive).  They requested an ongoing discussion of our concerns and requested that we offer remedies to address our concerns.

 The DOL proposal is very problematic for many reasons, including the inevitable cost increases it will cause, the lack of access and fewer choices the rule will engender, and the enormous data disclosure and retention burdens the rule imposes for both B-Ds and registered reps. The proposal  also increases potential liability, limits education, and does not adequately address advice to plan distributions or rollovers to other plans, including IRAs.  NAIFA will continue to work with the DOL to address the unintended consequences of the proposal in the rule-making process as well as with Congress to ensure a workable solution is ultimately crafted.