The federal Dodd-Frank financial reform law has broad implications affecting insurance and financial advisors and their clients across the country, NAIFA Immediate Past President Terry Headley told the Minnesota House of Representative Commerce and Regulatory Reform Committee during a Feb. 15 hearing.
“NAIFA members are community-based, independent business owners,” said Mr. Headley. “They serve the middle-income market. … Our members are clearly Main Street and not Wall Street.”
“The target (of Dodd-Frank) was really Wall Street, but unfortunately the collateral damage has been on Main Street,” he continued. “The law of unintended consequences is fully at work here.”
Specifically, Mr. Headley told the legislators that, if not done properly, the Securities and Exchange Commission’s forthcoming fiduciary rule, which comes under the auspices of Dodd-Frank, could threaten to disenfranchise middle-market investors by increasing the cost, liability and regulatory burden of the advisors who serve them. NAIFA has been working diligently to ensure that the final SEC rule protects the business model of advisors who serve middle-market investors.
Headley also said that NAIFA is watching to ensure that “regulatory creep” associated with the Federal Insurance Office and Consumer Financial Protection Bureau, both created under Dodd-Frank, does not threaten the state-based regulation of insurance that has served consumers well for decades.
Mr. Headley finally commended the Minnesota legislature for passing the North American Securities Administrators Association model act and the National Association of Insurance Commissioners’ model on senior designations for financial advisors.
He urged the legislators to adopt the NAIC model on annuities suitability, and answered several questions on annuities and the model. Following Mr. Headley’s testimony, the Committee voted unanimously in favor of the NAIC model, which now goes on to consideration by the full House.