Just what we needed. The Department of Labor has released its final fiduciary rule—a 1023 page document seen by many (or at least me) as a great boon to significant segments of the U. S. population: attorneys, the IRS and insomniacs. One might further the analysis by suggesting that the rule, like social programs without judicious oversight and the voting bloc of the left, will create an inevitable increase in at least the third category of constituents—that bounty being you, the now-sleepless-in-Scranton insurance agent.
To put it mildly I haven’t the brain power of even the least accomplished actuary (although three people in my acquaintance suggest I may have a better sense of humor), but I am “gifted” with a chronic, seemingly irreversible, morbid cynicism regarding the liberalization of the American judicial system. Most poignantly involving rulings that emasculate the concept of personal responsibility and transfer huge sums of money, on a contingency basis, from the pockets of defendants who “can afford it” to the Brooks Brothers pockets of ambulance chasers and, often tragically fleetingly, to the leatherette wallets of individuals (or their dependents) who were, in a sane society, quite likely destined to become uncompensated casualties of Darwinism. It doesn’t take a rocket surgeon to figure out that McDonald’s coffee is hot or that one shouldn’t touch a metal extension pole to an overhead line regardless of how many languages are represented on the warning label.
When these characters get their hands on “reasonable compensation”, “prohibited transaction”, “sole interest of the client”, and “best interest of the client”, I can’t help but envision a teeming hoard of “best plaintiffs’ law firms” descending like apocalyptic locusts on ignorantly sympathetic courts with proof in hand that an insurance company and bait shop in Idaho offered an annuity that would have garnered the consumer the windfall of another fifteen dollars a month in retirement income. The words “punitive damages” do not fill me with greed-infused glee. With the issuing carrier, perhaps reinsurer, the marketing group, the BGA or IMO, the writing agent, the consultants involved in product design, the printing companies who supplied the applications, the company who produced the signing pen and the Starbucks where the contract was signed all named as defendants, the mind quakes at the costs of doing business in, around or even innocently catering to the insurance industry. Forget the premiums for E&O coverage (if it is even still available)…think what your fair trade caramel latte will cost!
But perhaps I digress…
Clearly the Department of Labor has either willfully ignored or sadly overlooked the potential harm that this rule could bring to both the insurance industry and the consumers they serve. We are an industry already suffering from a dearth of new talent, artificially suppressed interest rates and a mainstream media seemingly diabolically fixated on corroding the public’s faith in institutions—designed and passionately driven to provide security in retirement for clients and comfort to families in time of tragedy—by gluttonously seizing on a comparatively few miscreants (or erroneously analyzing perfectly sound transactions) and lashing the uninformed into a frenzy of ”righteous” indignation and/or ignorant outrage.
Should the DOL final fiduciary rule stand as is, it’s difficult if not impossible to see an overall benefit to consumers for myriad reasons, many of which are beyond both my grasp and the space here allowed. But the limitations placed on producers, the disclosure requirements, the perhaps unintended confusion and suspicion that could arise in prospects during the sales process, exemptions granted ERISA plans but not IRAs, the different treatment of fixed annuities versus fixed indexed annuities, and a host of other concerns will dramatically change the landscape if not amended. An exodus of producers—reasoned, economically necessary or mandated—would create even less ability for consumers to obtain the sound advice many desperately need.
I urge you to get involved with your industry organizations and work on initiatives to modify the DOL rule to one even remotely reasonable for our industry and the consumers you serve. Otherwise there may be more than a few of us asking: “Do you want whipped cream and drizzle on that?” [SPH]
