Insurance Industry Still Fighting Fiduciary Standard Hot
The insurance brokers at NAIFA are still balking the notion that they should be held to a fiduciary standard and be regulated accordingly. If that happens, they argue, the mass-market retail investor will suffer.
According to a recent survey of the trade group's members, those who deal in securities as a registered rep or IAR spend an average of $9,000 a year on compliance.
If that spend goes up just 15% under the post-financial-reform regime -- for an added cost of a little over $100 a month -- 65% said they'll curtail their activities in order to avoid the extra expense.
A full 20% of the group's membership will get out of the securities trading business and concentrate on other activities like insurance sales. Interestingly, another 14% say they'll raise their fees to compensate -- a move that, if it happens, could have a negative impact on their ability to compete with RIAs and other professionals who have already been working under a fiduciary standard and the associated regulatory load.
The rest will "limit their practice to affluent clients only."
Characterizing the fiduciary relationship as a financial headache is probably not the best marketing move in a market where retail investors are already sensitive to conflicts of interest between themselves and their advisors.
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