Dive Brief:
- The Department of Labor's fiduciary rule has created plenty of controversy and litigation, and today the Indexed Annuity Leadership Council (IALC) became the latest entity to file a legal challenge against it.
- The IALC says that while it doesn't dispute that financial professionals should act in their clients' best interest, their legal challenge is necessary because the rule "creates an unworkable standard for independent agents and insurance companies and goes far beyond DOL's authority."
- The IALC says the rule will significantly restrict access to products and retirement information for those retirees who need it most, while the White House and the Labor Dept. say it was a necessary step in protecting Americans.
Dive Insight:
Jim Poolman, Executive Director of IALC, said in a press release that his organization is not disputing that retirement advisors should act in their best interests of their clients, saying that issue is not the basis of this litigation. He said the Labor Dept. is "attempting to redirect the focus," and added that the fiduciary rule will harm those who need the principal protection and lifetime guaranteed income that fixed indexed annuities offer.
On the flip side, proponents believe the rule is critical to protecting Americans' savings and preserving their retirement security.
President Obama on Wednesday vetoed a congressional resolution that sought to kill the rule, writing a note that in part said: “The outdated regulations in place before this rulemaking did not ensure that financial advisers act in their clients' best interests when giving retirement investment advice. Instead, some firms have incentivized advisers to steer clients into products that have higher fees and lower returns — costing American families an estimated $17 billion a year.”
For employers, the rule is expected to have an impact if they are also plan sponsors.
