ATTORNEY NEWSLETTER

Insurance Agents and the Fiduciary Rule

Putting You First

The Department of Labor’s (DOL) long-awaited “fiduciary rule” recently took effect and ushers in significant changes to the annuity and life insurance industry. The fiduciary rule holds advisors and insurance agents to a higher standard of conduct in recommendations and sales of annuities, life insurance and other retirement investments to the public. We at Evans Law Firm applaud the fiduciary rule and want you to read more about it, especially as it relates to retirement planning and the sales of annuities and life insurance. We have years of experience combating exploitative financial practices against consumers, especially seniors. If you or a loved one has been a victim of a breach of fiduciary duty, securities fraud or financial elder abuse, or find yourself headed toward a FINRA (Financial Industry Regulatory Authority) arbitration, contact the Evans Law Firm securities and financial elder abuse attorneys at (415) 441-8669 and we can help. As California lawyers, we only handle these types of cases arising in California.

What This Means

The fiduciary rule requires insurance agents to offer clients only “prudent recommendations” when it comes to investments, including investments in annuities, life insurance, and other retirement savings vehicles. To arrive at a prudent recommendation, the agent must follow a thorough and well-documented series of steps with the client. These steps —referred to as the “prudent process” — include:

• Gathering information that is relevant to the product being recommended and to the needs of the retirement investor;
• Assessing the information that has been gathered; and then
• Making an informed and reasoned recommendation that puts the interest of the retirement investor first.
We here at Evans Law Firm cannot understate how serious the prudent process is, particularly for seniors. Often, agents and brokers rush the process, or ignore it altogether, in order to close and take a commission. The fiduciary rule is meant to stop that wayward practice but in reality you need to protect yourself. That’s why we at Evans Law Firm want you to know what is required of your agent and to hold him or her to it. As experienced annuity and life insurance attorneys, we at Evans Law Firm see clients every day who’ve lost money as a result of agents ignoring or circumventing their responsibilities. If you or a loved one has suffered a loss, we can help at (415)441-8669. And if you’re a senior, know that California provides you additional protections from financial elder abuse by brokers and agents. We have financial elder abuse attorneys at Evans Law Firm with vast experience in financial elder abuse cases in California, and can help.

Finally, the new fiduciary rules specifically address sales commissions. In certain transactions, an agent may receive a sales commission only if the following conditions are satisfied before the sale:

• The agent acts impartially; that is, by putting the client’s best interests first;
• The agent’s compensation is reasonable relative to the services provided;
• The agent makes written disclosure of his compensation, his relationship, if any, to the insurance carrier, any contractual limitations on his ability to recommend certain products, other costs of holding the contract, and any material conflicts of interest; and
• The client acknowledges receipt of the disclosures in writing and specifically approves the transaction.

For now, the new commission rules apply only to the sale of life insurance and fixed rate annuities, and exclude variable and fixed indexed annuities. The exemption illustrates just how complex the new fiduciary rules are. Whenever you consider any kind of annuity or life insurance purchase we at Evans Law Firm strongly recommend you seek a third-party professional’s opinion before you sign anything. Annuities and life insurance are complicated financial products and the rules governing sales and issuance of those kinds of policies are complicated as well. Always take your time and learn as much as you can before any discussions and – again – always consult a third-party professional and your tax advisor before any purchase.

Contact Us

If you or a loved one has been a victim of a breach of fiduciary duty, annuity or securities fraud or financial elder abuse in San Francisco County or anywhere in California or are headed to FINRA Arbitration, contact the Evans Law Firm securities attorneys at (415) 441-8669, or by email at info@evanslaw.com. Our attorneys have experience with complex securities cases, arbitrations, and mediations; and complicated financial contracts and large insurance companies. We can help guide your case through a jury trial or toward an equitable settlement. We also handle cases involving physical and financial elder abuse, other types of qui tam and whistleblower cases, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.