Sen. Elizabeth Warren, D-Massachusetts, and Rep. Elijah Cummings, D-Maryland, are urging the Department of Labor and Office of Budget and Management to quickly finalize the DOL’s proposed fiduciary rule, based on what they say is evidence the financial services industry is exaggerating the rule’s potential negative consequences.

In a letter sent to Labor Secretary Thomas Perez and OMB director Shaun Donovan, the two lawmakers say the “doomsday” scenarios advanced by industry opponents of the rule don’t comport with what some stakeholders are disclosing to investors.

Specifically, they cite comments to investors made by four providers of guaranteed income products—Jackson National Life Insurance Co., Lincoln National, Prudential Financial, and TransAmerica Corp.

In December 2015, those companies and five other leaders in the annuity industry authored an opinion editorial, claiming the DOL’s proposed rule would have a “potentially devastating impact” on Americans’ access to annuity products, particularly for low and middle-income earners.

This is an argument that has been advanced by industry interest groups and stakeholders throughout the more than five-year rulemaking process.

Read our coverage on the DOL fiduciary rule HERE

In that op-ed, the insurance companies said, “it is difficult to overstate the detrimental impact the proposed rule will have on the middle-class.”

But in statements made to investors during earnings calls last year, many of those same companies took a much more “sanguine” view of the rule’s impact, according Warren and Cummings’ letter.

And those views should be meaningful to regulators at the OMB, given securities law requirements that public companies provide investors with “true and accurate assessments of the impact of the proposed rule,” or else risk violating disclosure requirements.

While legally bound to be accurate with investors, those same companies had no such requirement in relaying assessments of the rule’s impact to regulators in comment letters, note Warren and Cummings.

In a May 2015 conference call with analysts, shortly after the proposal was made public, Lincoln National CEO Dennis Glass, said, “we don’t see this as a significant hurdle for continuing to grow that business,” in response to a question on the rule’s impact.

Around the same time Stephen Pelletier, COO of Prudential Financial, told investors, “we’ll be able to make (annuities) these offerings on terms that work for everybody.”

The lawmakers’ letter also noted Jackson National Life and TransAmerica Corp. for assuring investors of their ability to adjust to the DOL’s proposal.

The OMB is two weeks into its review of the DOL’s rule, which will take around 50 days, if that review is expedited.

Critics of the proposal have questioned its potential impact on annuities, which are mostly sold on commissions.

While the proposal does not outlaw commission-based investment products, many ERISA experts have suggested the proposal’s Best Interest Contract Exemption will make commission-based sales difficult for advisors’ to execute, given new and extensive disclosure requirements and the heightened prospect of private litigation against advisors resulting from the proposal.

That could disincentive advisors from marketing annuities at a time when many retirement experts and other regulatory bodies are calling for wider access to guaranteed-income products, say critics of the rule.

Mike Webb, vice president of Cammack Retirement Group, a New York-based fiduciary advisory and a supporter of the DOL’s rule, suggested the issues raised in Warren and Cummings’ letter may be academic at this point.

“I believe that insurers, as well as the remainder of the financial services industry, are preparing for the inevitable reality of the new fiduciary rule,” said Webb in an email.

“The only question at this point is the final form that rule will take,” he added.

Instant Insights /

Lawmakers say insurance companies exaggerate DOL rule fallout

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