Wisconsin Could OK Annuity Suitability Update Soon

The Labor Department has been trying to set fiduciary rule standards that could eliminate or sharply curtail use of commissions in connection with annuity sales.

The U.S. Securities and Exchange Commission has adopted Regulation Best Interest, which changes sales standards but allows use of sales commissions.

The National Association of Insurance Commissioners — a group for state insurance regulators — developed model language for updating an existing annuity sales standard model. The existing model required annuity sellers to verify that the products offered to consumers suited their needs.

The SEC already regulates the sales of variable annuities.

Many state regulators believe that a non-variable annuity regulation provision in the Dodd-Frank Act requires states to move toward implementation of the NAIC sales standard update by 2026 to keep the SEC from preempting state regulation of non-variable annuities.

What It Means

For annuity specialists who have a strong preference for either a pure, fee-based approach or protecting the current, commission-based system, the battle means that it's important to continue to keep an eye on Washington and state capitals, and to support the industry groups that are expressing their point of view in sales standards update proceedings.

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Pictured: The Wisconsin State Capitol, in Madison, Wisconsin. (Photo: Shutterstock)