The delay until June of what's known as the fiduciary rule is expected to give the new administration time to revise parts of it.
However, since financial services companies have had a year to prepare for the regulation, they have already been changing how they compensate their salespeople and price their services.
Annuities, an insurance product that allows savers to buy a pension-like stream of income for life, have been a particular target of the rule, because many varieties have a complex set of fees and penalties, and provide sellers with high commissions. The portion of the rule that deals with annuities will now take effect
The Obama administration said that many brokers and advisers placed people into products that cost more and offered no better returns than lower-cost options because they received higher commissions for those choices. So, the
Annuities are sold by
Fixed indexed annuities, which also were targeted in the pending rule, also had a drop in sales after the rule was published. About 2/3 of fixed indexed annuities are in IRAs, and about 60 percent of variable annuities are in IRAs.
Variable annuities have been selling less well since the pending rule was announced, but LIMRA, an insurance industry research group in
Because low interest rates have made it harder for companies to offer income guarantees that are attractive to customers, those numbers would have fallen to about
Geising said LIMRA expected that total annuity sales would drop 10 to 15 percent if the fiduciary rule was implemented, and that sales would shift away from variable and fixed indexed annuities to the simpler immediate annuities or deferred annuities, which are like buying your own pension.
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