Annuities Offered a Fiduciary Concession, Warren’s Defense

Wealth Adviser Daily Briefing: Annuities Offered a Fiduciary Concession, Warren’s Defense

By Michael Wursthorn

The Wall Street Journal

Jan 20, 2017 5:30 am ET

The Labor Department is proposing to water down an element of its new retirement-savings rule that would allow purveyors of certain annuities to continue charging commissions, though the concession isn’t likely to appease the rule’s harshest critics.

The proposal, coming in the waning hours of the Obama administration, would effectively exempt some indexed-annuity sellers from the fiduciary rule’s standard of giving advice to retirement savers that is free of conflict.

In issuing the proposed exemption, the Labor Department addresses one of the biggest complaints from those opposing the fiduciary rule: that it would destroy the business of many independent annuity sellers. The National Association of Fixed Annuities has been leading the charge against the rule in the courts as a party to one of several cases seeking to kill the rule or narrow its reach.

Still, industry players say the proposal isn’t likely to move the needle much when it comes to critics’ efforts to delay and possibly repeal or revamp the rule.

That likelihood has gotten Democrats to roll out a new strategy to defend the fiduciary rule. Sen. Elizabeth Warren is sending letters to the dozens of major financial institutions that have already started taking steps to comply with the rule before its implementation starts in April.

In the letters addressed to J.P. Morgan Chase & Co., Wells Fargo & Co. and Fidelity Investments, among others, Ms. Warren praised them for announcing steps in recent months to comply with the rule. These include lowering mutual fund fees and suspending the provision of investment advisory services on a commission basis. She’s requesting the companies answer several questions, including whether they support delaying the regulation and if they would roll back their already-announced plans if the rule’s implementation is pushed back.