Annuity Salesmen Fight New Fiduciary Rule
May 7, 2024
Something called — perversely, I might add — the Federation of Americans for Consumer Choice, Inc. (“FACC”) has filed a lawsuit to stop the new Fiduciary Rule even before it goes into effect on September 23, 2024. According to the lawsuit, the FACC is "a trade organization whose members are independent marketing organizations, insurance agents, and agencies that market fixed insurance products including traditional fixed rate annuities and fixed indexed annuities."
What They Want to Stop
“The rule and amended prohibited transaction exemptions (PTEs) will protect retirement investors by requiring trusted advice providers to follow high standards of care and loyalty when they make investment recommendations. Under the final rulemaking, trusted advisers will have to:
- Meet a professional standard of care when making recommendations (give prudent advice);
- Never put their financial interests ahead of the retirement investor's when making recommendations (give loyal advice);
- Avoid misleading statements about conflicts of interest, fees, and investments;
- Charge no more than what is reasonable for their services; and
- Give the retirement investor basic information about the adviser's conflicts of interest.
Retirement investors should expect no less from trusted investment professionals. The rule and exemptions are carefully designed to honor retirement investors' legitimate expectation of advice that is in their best interest.” - from DOL Fact Sheet.
Lawsuit Nuggets
"... in its zeal to reach the desired result of turning every financial product salesperson who deals with a retirement investor into a fiduciary, the DOL has rushed this latest rule package through at extraordinary speed and without any substantial consideration of the consequences or the effect it will have on the insurance industry in particular."
"... the 2024 Fiduciary Rule is inconsistent with the intent of Congress as expressed in ERISA, and the DOL has exceeded its authority and acted arbitrarily and capriciously..."
The Plaintiffs
- FACC, which delcares on their site: "The problem is the DOL wants to turn legal principles on their head by turning brokers and agents into fiduciaries contrary to centuries of common law..."
- James Holloway (“Holloway”) is a resident of Anderson County, Texas. Holloway is a licensed insurance agent in Texas, authorized to solicit the sale of, among other products, annuities. As part of the services he provides, Holloway regularly makes recommendations regarding the purchase of annuity products in IRAs, including in connection with rollovers from 401ks and other employer benefit plans under ERISA.
- James Johnson (“Johnson”) is a resident of Smith County, Texas. Johnson is a licensed insurance agent in Texas, authorized to solicit the sale of, among other products, annuities. As part of the services he provides, Johnson regularly makes recommendations regarding the purchase of annuity products in IRAs, including in connection with rollovers from 401ks and other employer benefit plans under ERISA
- ProVision Brokerage, LLC (“ProVision”) is an independent insurance marketing organization with its principal place of business in Denton County,
- Eric Couch (“Couch”) is the sole member of ProVision and a licensed insurance agent residing in Denton County, Texas. ProVision assists financial advisors, insurance agents, and clients with retirement planning, specializing in annuities and life insurance products.
Stay wise and well (and know that despite the odds, roadblocks and pushbacks by entrenched financial interests, many are trying to actually improve retirement outcomes for Americans).
