4 - NAIFA / NALU
3. Discussed Senior Investment Protection
Gary Sanders and Steve Kline (National Association of Insurance and Financial Advisors—NAIFA) provided a presentation
on senior investor protection. Mr. Sanders explained that NAIFA is working on an educational program to help its members
“navigate the waters” of retirement investment in order to serve and protect their clients.
Mr. Kline stated that NAIFA
generally supports laws of this nature, and approves of the voluntary reporting process and the legal safe-harbor provisions,
but has some issues with vague terms and definitions. He said NAIFA would like the NAIC to consider creating a model law
or regulation similar to the one created by the North American Securities Administrators Association (NASAA) for securities
Cybersecurity (EX) Task Force
Gary Sanders (National Association of Insurance and Financial Advisors—NAIFA) said NAIFA is in agreement with the
statements made by the IIABA and AHIP, and particularly concerned with starting the document off with the sentence, “as a
consumer you have a right to,” and using statements that are not law in most states. He said this causes confusion to the
Gary Sanders (National Association of Insurance and Financial Advisors—NAIFA) said insurance and financial advisors are in the best position to uncover schemes that exploit seniors, such as suspicious transactions and access to accounts.
He said NAIFA has proposed and supports model legislation to protect seniors from exploitation.
- Gary Sanders (National Association of Insurance and Financial Advisors—NAIFA) agreed that use of the term “cash value” was confusing. 2017-1, Life Insurance Buyer’s Guide (A) Working Group Conference Call, February 7, 2017
Ms. Mealer had suggested replacing a paragraph that detailed the kinds of questions consumers might ask of an insurance agent, with a general statement that consumers should consult with their insurance agent for more information.
Mr. Sanders suggested that retaining the more detailed information is helpful to consumers. He said consumers need to know what an agent can do for them, noting that he liked the following sentence that Ms. Mealer suggested removing: “An agent can help you review your insurance needs and give you information about the available policies.” 2017-1, Life Insurance Buyer’s Guide (A) Working Group Conference Call, February 7, 2017
2017-1, Preventing Abuses in Life Insurance and Annuities (A) Working Group Conference Call, February 21, 2017
- 3. Discussed Comment Letters from the ACLI, American College of Financial Services and NAIFA, and from the CEJ The Working Group received a joint comment letter from the American Council of Life Insurers (ACLI), The American College of Financial Services and the National Association of Insurance and Financial Advisors (NAIFA). Gary Sanders (NAIFA) summarized the comment letter. He said the first issue raised in the letter was concern with the name “Preventing Abuses in Life Insurance and Annuities (A) Working Group.” He said the name could be read as implying that insurers and agents are employing abusive practices with consumers and that these practices need to be prevented. He said the overwhelming majority of players in the insurance industry are trying to do the right thing, and he thinks the name of the Working Group does not reflect this reality.
Mr. Sanders said the comment letter also raised a concern with the discussions on the Working Group’s Jan.10 conference call. He said the call was dominated by comments and discussions of alleged misconduct that had little or nothing to do with the Working Group’s charge. He said the Working Group should limit its discussions and activity to the three documents named in the charge.
Mr. Sanders said the comment letter also questioned the need for the Working Group. He said that there has not been any demonstrated issue with senior designations and that the
Working Group seems to be “a solution in search of a problem.”
- Gary Sanders (NAIFA) disagreed with Mr. Birnbaum’s assertion that the industry has spent time trying to deflect the work of the Working Group. He said the industry has wanted the Working Group to stay focused on its charge. 2017-1, Life Insurance and Annuities (A) Committee Conference Call, February 24, 2017
2017-1, March 24, 2017, Promoting Appropriate Sales Practices in Life Insurance and Annuities (A) Working Group Conference Call, March 24, 2017
- Mr. Birnbaum said the reason for the survey is to determine whether or not there is a national issue such that the model should be revised. He disagreed with asking each state to answer whether they think there is a national issue. Mr. Sanders agreed with Mr. Birnbaum and suggested asking questions that focus on whether a there is an enforcement issue. Mr. Birnbaum said both qualitative and quantitative data are useful and suggested that the survey should ask whether states have encountered situations that they cannot enforce or address under their current laws.
- Mr. Sanders listed his objections to some of the wording in the revisions proposed by Ms. Cude and Ms. Kitt. He did not like the sentence “it can be hard to decide which firms and advisors offer products and services that meet our needs” because it sounds like a suitability issue, not a credentialing issue. He said if the Consumer Alert brings in too many subjects, it compromises the effectiveness. Mr. Sanders said he does not like the phrase “beware of the free lunch investment seminar” because it sounds like there is something inherently wrong or bad with a free lunch seminar. He said some of them do not involve high-pressure sales tactics and can provide good information. Mr. Sanders said he did not agree with including “consider getting a second opinion from a Certified Financial Planner” in the Consumer Alert. He said the Consumer Alert should not tout a particular type of professional. Ms. Rafeld agreed that the statement could reference “an advisor you trust” or something similar. Mr. Sanders questioned the need to expand the scope of the Consumer Alert beyond seniors. Ms. Rafeld explained that the information the Working Group has gathered clearly indicates the targets of the free lunch and free dinner emails and flyers are not just seniors, adding that the Working Group has agreed that the Consumer Alert would benefit all consumers.
- 7. Received an Update from the Promoting Appropriate Sales Practices in Life Insurance and Annuities (A) Working Group Gary Sanders (National Association of Insurance and Financial Advisors—NAIFA) said he had emailed a comment letter on May 12 reiterating his concerns regarding the decision made by the Working Group to not request, as part of the survey, that the states provide the number of complaints received, if any.
- He said the survey asks whether a state has received complaints that involve the misuse of senior-specific certifications/designations without also asking states to provide the number of complaints received, if any. He said this risks doing harm to the credibility, validity and usefulness of the survey results.
- Ms. Rafeld said the Working Group heard Mr. Sanders’ concerns on the May 11 call, and, at that time, explained that the survey does not ask for complaint numbers because of the degree of difficulty required to search for complaints to this level of specificity. She explained that the Working Group did not agree that complaint numbers were a prerequisite to getting an answer to the question at issue; i.e., whether the states have the necessary regulatory tools in place to address the misuse of certifications and professional designations. Director Ramge said the Working Group could always follow-up on the survey if additional clarification is needed. 2017-2, Life Insurance and Annuities (A) Committee Conference Call, May 19, 2017
- 2017-3, Promoting Appropriate Sales Practices in Life Insurance and Annuities (A) Working Group Conference Call, September 7, 2017
- Gary Sanders (National Association of Insurance and Financial Advisors—NAIFA) did not disagree with adding language to focus on credentials, but he suggested avoiding pejorative phrasing and suggested saying something like: “Have you been approached by someone who says they are an expert in insurance or financial services?”
- He raised a similar concern with last sentence in the revised second paragraph: “But there’s a chance you could feel pressured to buy something either during or after the event.” He said it is no secret that these seminars are marketing efforts and that the use of the term “pressured” creates an unfair connotation that there is something illegal going on.
- He would suggest saying “But there’s a chance you could feel encouraged to buy something either during or after the event.”
- He suggested adding “attend” to the end of the first sentence in the first bullet, so it reads: “The offer of free meals, door prizes and/or free advice may lead you to attend a seminar when you wouldn’t otherwise attend.”
- He also suggested replacing “may impress you” with “be impressive” in the first phrase of the second sentence of the first bulleted paragraph.
- Mr. Sanders also suggested that the bullet titled “Report Scams” should include to whom scams should be reported. He suggested: “Report scams to the state insurance department.”
Gary Sanders (National Association of Insurance and Financial Advisors—NAIFA) said this language, while well intentioned, does not work, practically speaking. He said this standard of making sure the financial expert cannot benefit from a consumer’s financial decision does not correlate to consumers getting good advice. He said even experts with a fiduciary obligation to their customers might benefit financially from a consumer’s decision. Mr. Sanders suggested that the consumer alert simply encourage consumers to consider getting a second opinion. 2017-3, Promoting Appropriate Sales Practices in Life Insurance and Annuities (A) Working Group Conference Call, November 1, 2017
Gary Sanders (National Association of Insurance and Financial Advisors—NAIFA) said NAIFA does not oppose or fear a best interest standard. He reiterated that NAIFA members have relationships with consumers and, as such, annuity sales are driven by that relationship and not the type of producer compensation structure. Mr. Sanders also raised a number of questions related to the proposed revisions particularly as related to the compensation issue. 2017-3, Annuity Suitability (A) Working Group, Honolulu, Hawaii, December 3, 2017
Gary Sanders (National Association of Insurance and Financial Advisors—NAIFA) said the idea that Model #278 should be revised is a solution in search of a problem. He said there is no indication that there is an issue such that Model #278 should be revised. Mr. Sanders disagreed with Mr. Birnbaum and said uniformity is an important goal. 2017-3, Life Insurance and Annuities (A) Committee, Honolulu, Hawaii, December 4, 2017