The new U.S. Labor Department fiduciary standards for retirement rollover advice could help stronger independent marketing organizations crowd out competitors, according to the leader of a top annuity issuer.
Chris Blunt, the chief executive officer of F&G Annuities & Life, talked about the impact of the department's new Retirement Security Rule regulation effort last week, during a conference call with securities analysts. The Labor Department itself suggested that IMOs could help agents and brokers compare a wide range of annuities, along with other investment options, and keep compensation differences from influencing their recommendations.
Blunt predicted that, if the new requirements survive court challenges and take effect as written, they could help the more sophisticated IMOs stand out, grow and lock in market share.
"This may force independent agents to affiliate with one IMO, versus multiple IMOs," Blunt said. "The best players look at this and say, 'We can build some nice moats for ourselves."
What it means: If Blunt is correct, the new sales standards could shift the center of annuity distribution power toward big distributors, and away from smaller distributors and financial professionals.
Blunt has a better window on the impact of the new Labor Department regulations than most, because he's the head of the company that ranked eighth in terms of U.S. individual annuity sales in 2023, with $9.8 billion in sales, according to LIMRA sales survey data.
Blunt's views: Blunt spoke to the analysts during a call F&G held to go over results for the first quarter with the analysts.
He acknowledged that the new DOL regulations will increase F&G's compliance costs. "It's annoying," he said.
But he suggested that the regulations will have little or no effect on F&G's sales or earnings, and he noted that the Des Moines, Iowa-based company now gets about 85% of its sales from financial professionals who are licensed to sell securities.
Those financial professionals are already operating under the U.S. Securities and Exchange Commission's Regulation Best Interest sales standards, Blunt said.
Right now, he added, the real constraint on annuity sales is the supply of capital, not the sales pipeline.
"We have more sales opportunity than capital right now," he said.
