Public policy and planning address retirement concerns

A recent survey by the Employee Benefit Research Institute found that nearly 4 in 10 Americans fear retirement could be forever out of reach. This number is up nearly 10% from just a year ago. With Social Security insolvency knocking at our door, the need for financial security has probably never been so critical.

At Finseca, our mission is spelled out right in our name: FINancial SECurity for All. And it’s why we continue to draw attention to how important it is that elected officials and regulators get it right when it comes to the goal of consumer protection. We must work together to ensure that public policy advances rather than hinders access to the planning and planners that can help the millions of Americans who are concerned about retirement and their financial futures.

As many of you know, New York state’s Regulation 187 — as the data shows — has been incredibly problematic for consumers looking for access to financial security and more choices in the planning process. And it’s because of what has happened in the Empire State that Finseca has been actively engaged with lawmakers in any state that is considering a similar proposal.

For example, when California State Sen. Bill Dodd, with the backing of the California Department of Insurance, introduced Senate Bill 263, which included a standard far more onerous than New York’s, we knew we had to immediately get involved.

As introduced, the original proposal would have:

» Eliminated all forms of noncash compensation, including health and retirement benefits.

» Created a list of 15 factors that must be collected from the consumer. If the financial professional is not able to collect the information or the consumer does not provide it, a recommendation cannot be issued.

» Required multiple disclosure requirements over the course of the process, and would have set an incredibly high threshold to recommend a product replacement.

» Potentially made it impossible for a commission-based sale, in effect limiting the number of consumers who would have had access to financial advice from a professional.

Courtesy of a strong coalition led by the Association of California Life & Health Insurance Carriers with the help of Finseca, the American Council of Life Insurers, the National Association of Insurance and Financial Advisors, the Insured Retirement Institute, the National Association for Fixed Annuities, the Federation of Americans for Consumer Choice, and the Independent Insurance Agents and Brokers of America, we were able to take the legislation as introduced and align it more closely with the National Association of Insurance Commissioners’ best interest for annuities standard, which protects consumers while ensuring access to advice is not hindered. It’s a standard that has been adopted in 40 states.

In addition to this, Finseca also led the effort to clean up text in the California Insurance Code (dating back to 2003) that would have excused “non-resident direct response providers” from completing any of the life insurance training that was iterated in the legislation. Finseca firmly believes that if someone is offering financial advice to consumers, they should be held to the same consumer protection standards as are all producers in the profession. We’re pleased to report this correction has been made.

In the coming weeks, we believe Dodd’s bill (SB 263) will make California the 41st state to adopt a best interest for annuity standard.

In addition to the very troubling personal beliefs of nearly 4 in 10 Americans, there are 60 million American households that have no or not enough life insurance. That means millions don’t even have the benefit of the protection of a true financial security plan. Then, couple this with the roughly $12 trillion protection gap, and our work should be squarely focused on ensuring consumers have more access and more rather than fewer choices.

We can all agree that putting consumers’ true best interest first is a laudable goal and one we should — and can — achieve. We’ve seen it at the congressional level just recently with SECURE 2.0, and we continue to see it with the adoption of the NAIC model. A path forward like that will ensure middle-income savers have access to the financial advice and tools — including life insurance, investments and annuities — they need for true financial security.

Melissa Bova joined the Finseca government affairs team in November 2021 as its first vice president of state affairs. She may be contacted at [email protected].