3 Misconceptions about Best Interest

As the National Association of Insurance Commissioners considers amending the model suitability regulation, and as the U.S. Securities and Exchange Commission considers adoption of a parallel best interest proposal, the FACC Campaign finds certain misconceptions have taken root that must be addressed to ensure the ongoing debate is conducted based on facts and sound reasoning rather than preconceived notions or inaccurate assumptions. Kim O’Brien helped kill the DOL fiduciary rule. Here’s what she thinks about the new sales standards projects.

FACC Campaign Welcomes 5th Circuit Mandate – Encourages NAIC to Step Back from Best Interest

The Fifth Circuit saw through the fallacy of the Labor Department’s presumption that it could simply deem insurance agents and securities brokers (who are sellers of products) to be equivalent to investment advisers.  The decision blasted the Labor Department for ignoring the longstanding distinction between an agent and adviser, only the latter of which is a fiduciary based on a unique position of trust and confidence, for whom standards of prudence and loyalty apply under ERISA.   

In rendering its decision, the Court rejected the paternalism of the DOL, rejected the agency’s arbitrary exercise of power, and rejected the idea that regulators could just turn anybody into a fiduciary.  Now that the Fifth Circuit has spoken, one wonders whether the financial services industry, along with regulators, will heed this message or simply chalk off the decision as a narrow admonishment aimed at the Labor Department.   That would be greatly disappointing and a missed opportunity to redirect regulatory energies in a way that truly helps consumers. 

FACC to NAIC: Suitability Works

A fiduciary/best interest duty simply does not fit insurance which first and foremost is a product, not a service, and which notably is a guaranteed insurance product backed by an insurance company. Taking concepts like best interest and fiduciary duty, or whatever it is ultimately called, which never were intended to apply to the sales of insurance products and now applying them based on some ill-defined desire for a uniform standard is not warranted.

Rather than invasive surgery on a working regulation, the NAIC should consider a swifter and perhaps more effective solution to any remaining gaps is through improved disclosure.

Great Scott! Or should we say Great Scottrade!

While the Scottrade case and these various pronouncements generally are directed at the securities industry, not fixed annuities, the implications are deeply worrisome.  The Fixed Annuity Consumer Choice (FACC) Campaign is concerned these developments prove the U.S. Department of Labor is losing control over the rule and unleashing uncontrolled forces such as hyper-aggressive state regulators and the always profit-hungry plaintiff’s bar that may wreak havoc on the financial services industry.   


No, we don’t mean to your special someone. We mean “get engaged” in our campaign to save the future of fixed indexed annuities! The origin of the word “engage” can be traced back to the early 17th century and comes from the French “engager” which literally means ‘to...