NAFA Urges OMB to Reject New DOL Fiduciary Rule
NAFA met with staff from the White House Office of Management and Budget (OMB) and the U.S. Department of Labor (DOL) on Friday, October 20, 2023 to express our deep reservations regarding the DOL’s proposed new “Conflicts of Interest in Investment Advice” rule that the OMB is currently reviewing. Representing NAFA on the call were Cliff Andrews, CapCity Advocates, NAFA’s D.C. lobbyist and federal policy advisor and Pam Heinrich, NAFA general counsel and director of government affairs, along with three members of the NAFA Board of Directors: Kevin Mechtley, Andrew Payne, and Eric Taylor. The NAFA team met with OMB and DOL staff for approximately 30 minutes, highlighting a number of concerns regarding DOL’s anticipated new rule:
- Despite the DOL’s public protestations to not call the new proposed rule a “fiduciary” rule, we expect that the rule will be another de facto fiduciary-only rule, similar to the 2016 rule, which will have devastating consequences on the ability of low- and middle-income savers and retirees access affordable financial advice and safe retirement products. Such a rule will exacerbate the racial wealth gap and will harm millions of working-class Americans across the country who are trying to save for their retirement.
- The comprehensive and coordinated state and federal regulatory framework that is currently in place – the SEC’s Reg. BI, the NAIC’s best interest model regulation, and the DOL 2020 prohibited transaction exemption – provides significant and meaningful protections for retirement savers and has created a stable and certain regulatory environment for consumers and industry alike. Pursuing yet another separate regulatory scheme will cause instability in the marketplace and unpredictability and worse outcomes for retirees. Efforts should be directed toward enforcing the robust rules currently in place rather than promulgating an untested and unnecessary new rule.
- The DOL’s intention to resurrect a fiduciary rule contravenes multiple federal court decisions constraining what the DOL can do. Federal courts have repeatedly rejected the DOL’s efforts to expand fiduciary obligations under ERISA and the tax code, finding that the DOL exceeded its statutory authority in trying to change the rules that Congress put in place. Furthermore, new rulemaking that will negatively impact underserved populations is at odds with the stated economic policies of the Biden Administration, which is to empower and educate workers to grow the middle class.
- Given all of this, NAFA urged the OMB to reject the DOL’s recent rule proposal and allow the existing enhanced state and federal consumer protection regulations to continue to do the good work that they are intended to do – and are, in fact, doing.
The OMB and DOL personnel on the call did not ask any questions following NAFA’s presentation but did encourage us to continue to be engaged in the rulemaking process and to provide written comments if and when a proposed rule is published in the Federal Register. NAFA offered to be available for any follow-up questions and to provide any additional information.
While it is unlikely that the OMB will grant NAFA’s request, we appreciated the opportunity to meet with staff from OMB and DOL to share our concern that the impractical and unworkable regulation that we believe the DOL is pursuing will cause major disruptions to the independent distribution model integral to our association and will cause serious harm to millions of working-class families who are trying to save for their retirement as they will no longer have the same access to professional retirement advice. We believe a new DOL rule, no matter what it is called, is a bad idea legally and politically, and, most importantly, consequentially to retirement savers.
NAFA is monitoring all activity related to this proposed rulemaking and will continue to keep membership apprised of any developments. In addition, NAFA has been conducting targeted Hill outreach and continues working with our sister trade associations to protect our members’ interests.
NAFA, the National Association for Fixed Annuities, is the premier trade association exclusively dedicated to fixed annuities. Our mission is to promote the awareness and understanding of fixed annuities. We educate annuity salespeople, regulators, legislators, journalists, and industry personnel about the value of fixed annuities and their benefits to consumers. NAFA’s membership represents every aspect of the fixed annuity marketplace covering fixed annuities sold by independent agents, advisors and brokers. NAFA was founded in 1998. For more information http://www.nafa.com/.