All 50 States Now Aligned on Annuity Sales Standards
From the desk of Jim Eccleston at Eccleston Law
The annuity industry officially has secured uniformity in sales regulations across all 50 states. As reported by ThinkAdvisor, the New Jersey Department of Banking and Insurance approved a new annuity sales regulation modeled after an update from the National Association of Insurance Commissioners (NAIC). This model aligns with the Securities and Exchange Commission’s Regulation Best Interest (Reg BI) requirements.
New Jersey’s adoption makes it the 49th state to follow the NAIC’s model. New York remains the lone outlier, maintaining stricter annuity sales rules rooted in a fiduciary standard of care. States acted swiftly in updating their regulations to avoid federal oversight of fixed annuities by the SEC, as reported by ThinkAdvisor.
While industry groups have celebrated those moves, some fiduciary standard advocates remain skeptical. ThinkAdvisor reports that critics question whether a best-interest standard will materially change the annuity sales process or simply require clients to complete different paperwork.
Under the best-interest standard, annuity sellers must document the reasons for their recommendations and disclose compensation details. However, this framework still permits traditional commission structures and does not necessarily require comprehensive compensation disclosures to all clients.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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