Many wholesalers plan to keep selling commission-based products under the tougher rules established by federal regulators. The commission model is usually better for both consumers and agents, industry representatives say.
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Is anyone in this DOL equation considering the agent or advisor? I think not! How does it help the agent in the field, to explain what is already known in the industry – that the government seldom understands a complex industry like ours. The well written article above is correct, so what! It deals with what is true but our government doesn’t want to understand. It deals with what may be coming our way compensation wise or product wise. So the companies are figuring out how they can survive, the government is “protecting the consumer” and the insurance agent or advisor is still left out in the cold, holding the empty bag.
I wish someone with influence would adequately answer the question, why would any insurance agent or advisor ever sign a BIC, knowing full well this may put him/her in legal jeopardy down the road. Writing from a practical perspective, according to the DOL rule it will not matter if it was done in the “best interest of the client”. The sale which may include commissions may well have been in my clients best interest, so what! What matters is what the judge thinks, as the hungry attorney and a potentially angry client brings their case before the sitting judge – who by the way also doesn’t understand our industry or what’s actually is in the best interest of the client.
Post the DOL rule next year, every agent and advisor has been in harms way by their own government. I wish our Ivory Tower would hold themselves to the same standard, so they could experience the ungracious aspects of their “rules”.
This whole DOL rule “crisis” is the direct result of the insurance industry failing to reform itself. Time and time again, the NAIC, the SEC, Finra, and consumer – advocacy groups have complained about the inherent conflict of interest involved with a person giving advice on the products of different carriers from which the advisor will be paid. How can you fully trust the advice coming from a person that has a commissioned interest in the decision of the person being advised? This is not the agent’s fault. It’s the system to which one surrenders to when they sign a contract with a carrier to do business. The agent works for the carrier, not the consumer. This system was made law in 1948 and has been the cause for countless lawsuits and class action court cases to little avail for the consumer. The industry needs a com;plete reorganization with the consumer standing on equal footing with the carrier representative. But, will the industry do the right thing? They haven’t in the past and I doubt that without government oversight – something we all are against – the industry will continue with a business plan that has made the CEO’s VP’s and stockholders millions of dollars. It’s time for reform. The DOL rule is exactly what the industry deserves.
William Bridgers is correct DOL rule is exactly what this industry needs and even more on full disclosure and acting in the best interests of consumers including the fraud with cash value life insurance sales and scamming the consumer for a 95% commission versus a 2-5% commissions that goes right to the bottom line equity in the cash value policy versus going into the sales reps pockets, the life insurance industry is full of misrepresentations, conflicts and fraud