IRI Wants To ‘Hit The Reset Button’ With Fiduciary Rule

PALM BEACH, Fla. - An 18-month delay in the Department of Labor’s fiduciary rule will give proponents of the struggling variable annuity market more time to press for a uniform fiduciary standard and push for a regulatory pause.

That was the view from Insured Retirement Institute (IRI) president and CEO Cathy Weatherford as the IRI prepares to meet for its annual conference. The three-day event begins Sunday at The Breakers.

With sales plunging faster than barometric pressure in a hurricane, insurers furiously retooling product lines and the IRI looking to help advisors with solutions to the longevity risk challenge, this year’s IRI meeting couldn’t come soon enough.

“We’re very pleased that we have 18 months, and we’re going to have the opportunity to show the impact of what this rule has done to our industry,” Weatherford told InsuranceNewsNet.

Insurers, distributors and regulators would fall more closely into alignment if IRI can “hit the reset button a bit” and work with federal and state regulators to agree on a uniform standard, she said.

Staring at the relative calm between the initial rollout of the fiduciary rule in June and its ultimate impact to be felt after July 1, 2019, IRI is seeking still further delay of the rule until Jan. 1, 2020, Weatherford said.

Anti-fiduciary rule forces have argued for months that the rule has made life more expensive for advisors. Rule opponents also contend that the regulation has resulted in advisors dropping tens of thousands of small retirement accounts because they weren’t profitable enough.

The stunning drop in variable annuity sales reflects the industry’s recent hardships, due in no small part – although not exclusively – to the rule.

IRI's Umbrella Broadens

IRI’s umbrella broadened nearly a decade ago when the organization began to represent an industry coalition of insured products beyond variable annuities. The association has been in growth mode ever since despite recent declines in variable annuity sales.

Over the past two years, IRI increased membership by 43 dues-paying companies. IRI now represents more than 150,000 financial advisors. In 2010, IRI's membership topped 30,000 financial professionals.

IRI always will be anchored by its traditional membership of insurers, asset managers, broker/dealers and financial advisors, Weatherford said. But new areas of membership growth abound in the financial technology, or fintech, sector.

IRI and its board are expected to release more detail on their growth plans for the organization in the fourth quarter, she said.

Battling the States

Demographic trends favor the long-term growth of the annuity market. But, in the short-term, delaying the fiduciary rule will help IRI buy time to challenge the states that are pushing for their own fiduciary standard of care.

Over the past few months, some states have ramped up activity around imposing their own fiduciary standards.

A Nevada law imposing a “duty of a fiduciary” on financial planners took effect July 1. New York and California are considering fiduciary statutes of their own, which could materialize into a “significant potential threat” to the industry, said Erin M. Sweeney, a lawyer with Miller & Chevalier in Washington.

More piecemeal regulation, with some states adopting a fiduciary standard and others not, will only saddle advisors, Weatherford said. But a coalition of powerful financial services trade groups is pushing back against the states and forging ahead with initiatives to “harmonize” a fiduciary standard.

“We want a uniform best interest standard of care that services the best interest of the consumer and keeps the market intact and keeps people’s access to advice,” Weatherford said.

But she added that IRI wants that best interest standard to occur uniformly across all accounts held by investors, and any fiduciary mandate to come from the Securities and Exchange Commission, the nation’s chief regulator of variable annuities.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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