Trapped in the summer DOLdrums and facing a blank page to be necessarily converted to black and white for a July Life Insurance issue, my mind skitters across the insurance landscape peering into various sinkholes legislators and their JD-sporting country club cronies would have us believe are well stocked, exquisitely equipped storm shelters for the benign protection of the overwhelming majority of American consumers—the intellectually unprotected masses. If you can ignore the underlying assumption that insurance agents and brokers are predominantly morally reprehensible opportunists devoid of any compassion for their fellow man, you might take a minute to puff out your chest at the implied compliment that you are possessed of a so vastly superior intelligence.
So what’s the big deal? The DOL Fiduciary Rule as it applies to life insurance affects the sale of certain products to retirement plans, and the use of qualified plan dollars or IRA distributions to fund life insurance purchases. So either take the completely unambiguous, starkly black and white, (and fairly, reliably and reasonably adjudicated in case of conflict) steps necessary to be compliant, or simply avoid sales that might involve qualified plan or IRA dollars. Simple. If your practice thrives on these dollars, just sell something else to someone else. Forget about those you help daily, the government has decided to remove that weighty obligation from you—enjoy your freedom!
Sarcasm aside, my fear is exactly that. Some sources place the average age of the insurance agent in 2015 at 59. One study placed almost 20 percent of agency principals at 66 or older. At what point does one decide that, by the grace of God, a nice living has been made and a comfortable retirement funded by decades of ethical, dutiful service to families young and old, those of modest means and those more fortunate, and that continuing to serve in the face of yet another bureaucratic roadblock just isn’t worth the headache?
Further, my personal opinion is that if you don’t see the Fiduciary Rule as the camel’s nose under the tent, then you are DOLusional. Annuities are already in the crosshairs and the SEC is considering proposing their own set of fiduciary rules to impose further muddying the water. The SEC is in favor of non-governmental third party examinations of advisors. FINRA would be an example of such a third party—those great folks who’ve repeatedly turned a blind eye to folks who’ve Madoff with billions of investor dollars. Placing the complaint adjudication of the DOL Rule (and it’s incestuous successors) in the hands of a flawed tort system has the potential to turn virtually any permanent life insurance or annuity sale into a Powerball win for a “best plaintiff’s law firm.”
Investment in non-guaranteed products such as securities, mutual funds and many variable products has inherent risk. Those who haven’t the capacity to understand that should have their checkbooks confiscated. That the court system has established a precedent of vaguely plausible deniability in regard to personal responsibility is a plague on our industry as well as many others. Perhaps we should blame it on Starbucks—until the invention of the Frappuccino, all fresh coffee was universally assumed to be HOT.
But don’t waste your prayers on Congress forcing the court system to materially distance itself from the lottery through tort reform any time soon. In the 115th Congress, 167 members of the House and 55 Senators hold law degrees. (In contrast, 21 state their occupation as insurance agents or executives—four senators and 17 representatives. I’m astounded that it was that many quite frankly.)
But we share the blame for the public and legislative view that insurance companies are institutions hoarding an endless supply of cash ripe for judicially approved grand larceny. Consumer advertising focused on wealth management and implying lofty financial security shifts perception away from companies that keep widows and children out of shelters, keep alive dreams of further education and allow caring compassionate people to leave behind a legacy for the benefit of their less fortunate fellows. The industry is much more than a deep water harbor for the ultra-wealthy to park yachts bequeathed to their shallow offspring. But we as an industry, both in advertising and in “boots on the ground,” need to reach out to many more of those whose premiums don’t buy Lamborghinis. We need to redouble our efforts to produce and hand deliver checks that keep widows in their homes and children on a path to higher education.[SPH]
