Today’s Advisory Career

Financial Security For All

Advisor strategies in the rise of the regulatory state

by Marc Cadin

Mr. Cadin is the CEO of Finseca, the combined entity of the top producer group, AALU, and the top leaders and managers group, GAMA International, as well as NAILBA, representing the Brokerage Community, and Forum 400, a top producer community. Visit www.finseca.org.

In the face of a staggering $12 trillion protection gap and the daunting reality that tens of millions of Americans have minimal to no retirement savings, we need policymakers and regulators to come alongside financial security professionals. Their combined efforts can exponentially broaden the reach of financial security initiatives, ensuring that more individuals benefit from the services offered. The synergy between these two—policy-making and financial expertise—is pivotal in not only bridging the existing protection gap but also fortifying the financial well-being of countless Americans.

However, amidst these aspirations, we at Finseca have serious concerns about the rise of the regulatory state and the impact it will have on an already challenging compliance burden.

For example, if the Securities and Exchange Commission wins its ongoing legal challenge in SEC v. Cutter, more compliance and greater regulatory burdens may be coming your way. Finseca formally opposes the SEC’s actions, and you can read our legal brief at finseca.org. Now let me be clear, Finseca supports an appropriate level of regulations to ensure that consumers are protected.  But we also recognize that there’s occasions when well-meaning regulators go too far and actually hurt the people they are trying to protect.

Similarly, we’re very troubled by the news that the Department of Labor, for the fourth time in the last 13 years, is trying to jam a fiduciary rule through. Frankly, this is the worst proposal of them all. It’s offensively framed (commissions are not “junk fees” and state regulation is not “inadequate”) and substantively very bad.

Compliance Up… Compensation Down

Compliance is going to go up. Compensation is going to go down. And, candidly, the DOL doesn’t care. They don’t care about getting this right for consumers, and they certainly don’t care about getting this right for our profession.

This is taken directly from the White House Fact Sheet:

“these conflicts of interest are meaningful: an adviser may receive a commission as high as 6.5 percent to recommend some insurance products…When the saver pays for advice that is not in their best interest, and it comes at a hidden cost to their lifetime savings, that’s a junk fee…For example, advice rooted in conflicts of interest regarding the sale of just one investment product—fixed index annuities—may cost savers as much as $5 billion per year.”

Remember, an attack on one is an attack on all, and this attack is exactly why Finseca was created – to reunify our profession. With greater scale and a stronger voice, we can defeat this proposal. We still have a chance to influence this process with our elected representatives. But we need to act now. Contact your lawmakers today and let them know that the fiduciary rule is offensive to the work of this noble profession. Let them know that commissions are not junk fees, and Americans benefit from choice in how they access financial advice. One size does not fit all.

SECURE 2.0

The synergy between these two—policy-making and financial expertise—is pivotal in not only bridging the existing protection gap but also fortifying the financial well-being of countless Americans...

We took enormous strides forward earlier this year when we got SECURE 2.0 signed into law with overwhelming bipartisan support. But if the SEC and/or the DOL successfully move these misguided efforts forward, they would unquestionably harm consumers and monumentally set back our movement. These initiatives, put simply, would enhance the regulatory burden on the very men and women working to help people find peace of mind. Fewer Americans will have access to the advice and products needed to achieve financial security.

Finseca believes in appropriate levels of regulation to ensure consumers are protected. Still, excessive compliance and regulatory burdens lead to fewer Americans being financially secure.

President Joe Biden knows the struggle so many are facing. Last July, he reminded us, “People around the country wake up every day wondering whether they’ve saved enough to provide for themselves and their families before they stop working.” He asked us, “Think of all the people saying, ‘Am I going to be all right? Is my family going to be all right? Is my wife or my husband or my child, are they going to be OK?’”

Financial security professionals put an end to those worries. And as a recent Ernst & Young study shows, life insurance — especially permanent policies, investments and deferred income annuities — outperforms investment-only or investment-plus-other-products approaches in every combination. Individuals and families with life insurance, investments and guaranteed streams of lifetime income through things such as annuities are in a significantly better position to absorb the challenges that life throws their way.

We need to encourage more Americans to pursue holistic financial plans. We need to connect more Americans with financial security professionals. We need to exponentially grow the financial security profession and make their jobs easier, not harder. We must remember that our work will only be done when every American can put their head comfortably on their pillow at night, knowing they have a plan in place and they will be OK.

Fiduciary Rule: A Solution In Search Of A Problem

Finally, although this Department of Labor fiduciary rule effort is likely well intentioned, it is a solution in search of a problem that has already been addressed. Since the DOL’s last attempt to do this, there are now 41 states (representing more than 70% of U.S. consumers) that have adopted the best interest enhancements to the National Association of Insurance Commissioners Suitability in Annuity Transactions Model Regulation and the SEC’s adoption of Reg Best Interest, which greatly enhanced the standards financial professionals must follow.

To truly have financial security for all, there must be a concerted effort to broaden access to essential financial tools and resources. This involves dismantling barriers that impede entry for advice, particularly for underserved communities. By facilitating access, a more inclusive landscape is cultivated, empowering individuals to make informed decisions about their financial future.

Simply put, financial security for all is only possible by expanding access and choice — not limiting them, and Finseca will continue to advocate every day so that we can grow this profession and help more people become financially secure.