When the democratic left hypes the rights and responsibilities of individual states, we are Romans crossing the Rubicon.
First, it was government-run retirement plans, now it’s the fiduciary frenzy, as lawmakers in provincial capitals attempt to fix what they see as failings by the Feds.
That hotbed of political and moral posturing, Albany, announced its own best-interest standard for life and annuity sales in the wake of D.C.’s delay.
It’s something we’d normally cheer, but it’s New York and nicknamed the Empire State for a reason.
A major financial services firm for which we previously worked set up a separate corporate entity just for New York, a requirement for doing business within its borders. Navigating the sea of red tape took doing (and expense) which, of course, was passed to the consumer. Who’s to say it won’t happen again?
Calling it a “new requirement that would require” (lovely prose) any product offered by the advisor to best reflect the customer’s interest, Andrew Cuomo specifically referred to the recently-delayed federal fiduciary regulations.
“As Washington continues to ignore and roll back efforts to protect Americans, New York will continue to use its role as a strong regulator of the financial services and insurance industries to fight for consumers and help ensure a level playing field,” the governor said in a statement. “With these commonsense reforms, we are working to protect everyday New Yorkers and give them peace of mind when purchasing these products.”
The issue (or at least an issue) is the lack of harmonization between state and federal statutes, and its potential conflicts and contradictions. In a nod to the surreal nature of all that’s happening, we point to the controversy over marijuana regulation as an example of what can result.
“A transaction is considered in the best interest of a consumer when it is in furtherance of a consumer’s needs and objectives and is recommended to the consumer without regard to the financial interest of the product seller,” the announcement vaguely concludes. “Insurers would also be required to develop and maintain procedures to prevent financial exploitation of consumers.”
The 60-day notice and public comment period is now in effect through the end of February.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
