We’re seeing aggressive retirement product marketing – InsuranceNewsNet

WASHINGTON — Acting Assistant Secretary Ali Khawar today offered few details about the Department of Labor’s ongoing regulatory work, but acknowledged cooperation with other regulators.

This tidbit is likely to give industry executives hope for some consistency in future rules.

Khawar is the Principal Deputy Assistant Secretary of the Employee Benefits Security Administration. He addressed the agency’s regulatory work Thursday at the Insured Retirement Institute’s annual conference.

Last year, the EBSA announced regulatory plans to build on the regulation of sales of pension products via a new definition of “fiduciary” status. Khawar gave no indication of when the DOL would complete this work, but made it clear where the agency’s priorities lie.

He described being more focused on a sales environment where “people are marketed somewhat aggressively” and might not fully understand the products. It was this claim that seniors are losing billions to high fees and unnecessary product sales that led former President Barack Obama to introduce a fiduciary rule in 2015.

A regulatory odyssey

Obama’s fiduciary rule would later be overturned by a federal appeals court. The Trump administration replaced it with a set of two rules: a new prohibited transaction exemption allowing advisers to provide conflicting advice for commissions; and a reinstatement of the 1975 “five-part test” for determining what constitutes investment advice.

The Biden administration allowed the rule to go into effect in February, but introduced a new intent to redefine “fiduciary.” DOL regulators are talking to state-level regulators, as well as the Securities and Exchange Commission, Khawar said.

The Securities and Exchange Commission and state regulators have adopted best interest rules that somewhat harmonize, a consistency of rules that makes insurance executives happy.

Khawar pointed to the Labor Department’s open-door process, even when industry leaders might not agree with the answers. The task is difficult, he added.

“It’s difficult because we’re trying to write rules that apply to an entire industry,” he said. “At the same time, we recognize that not everyone does everything exactly the same way, which makes things tricky.”

Paula Nelson is Managing Director and Head of Strategic Growth at Global Atlantic Financial Group. Speaking earlier in the day from the main stage, she urged executives to take responsibility for industry missteps.

“With every regulation that frustrates us, there was usually something that was causing it,” Nelson said. “We always have to hold ourselves accountable for that. It’s very easy for bad actors to emerge in our industry and as long as we all stick together and united around the advocacy front, that’s what keeps the noise down.”

Editor-in-chief of InsuranceNewsNet, John Hilton has covered business and other beats in more than 20 years of daily journalism. John can be reached at [email protected]. Follow him on Twitter @INNJohnH.

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