UPHOLDING THE TRADITION

NAIFA continues its tradition of excellence in creating a favorable business environment for you and the clients you serve.

By the NAIFA Government Relations Team

As NAIFA celebrates its 130th year of protecting the interests of the financial services industry, the association is using its considerable power and influence to make sure that the issues that are important to you are heard by lawmakers and regulators and that your interests are protected and advanced.

Right after COVID-19 reared its ugly head, NAIFA made full use of this formidable influence to fight for a favorable business climate for you. The association advocated for small business loans, relief from payroll taxes and greater flexibility for workers to access retirement plan funds. All of these measures provided financial relief for many Americans and businesses.

But even before COVID-19, NAIFA had racked up numerous wins and victories. Here are a few of these accomplishments, which prove that when it comes to advocacy, NAIFA is second to none.

Regulation Best Interest

The Securities and Exchange Commission’s (SEC) “Regulation Best Interest” proposal has been finalized and went into effect on June 30, 2020, following NAIFA’s meetings with the chairman and with most of the commissioners’ offices.

As a recognized industry leader, NAIFA met with SEC Chairman Jay Clayton and several of the SEC commissioners and also filed formal comment letters to express our concerns with certain provisions of Reg BI. NAIFA will work with lawmakers and regulators to make sure that members can continue to serve Main Street families as they plan and prepare for a secure financial future.

The Senior Security Act

The House of Representatives passed The Senior Security Act of 2019, which establishes an interdivisional task force at the SEC to investigate continuing issues that senior investors face.

The Secure Act

The House of Representatives passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. This act provides small businesses with greater flexibility and incentives to offer their employees retirement plans and give workers greater access to retirement plans.

Fifty-one NAIFA members, one representing each state and the District of Columbia, signed a letter to congressional leaders in November urging passage of this act. “These financial professionals urging Congress to pass the SECURE Act show the strength of NAIFA’s grassroots army, which has members in every congressional district across the United States,” said NAIFA CEO Kevin Mayeux. “Insurance and financial services professionals are on the front lines, helping clients prepare for secure retirements. This is another way they are working on behalf of small businesses and American families to confront a potential retirement crisis.”

NAIFA exerts its influence to head off bad policies and encourage good ones.

Elder Act

New Hampshire Governor Chris Sununu signed a law that aims to protect seniors from financial exploitation. The law, based on model legislation developed by the North American Securities Administrators Association (NASAA), allows a BD to temporarily delay executing a client’s disbursement of funds request if the BD suspects that financial exploitation may be involved. New Hampshire securities regulators publicly thanked NAIFA for supporting this critical measure.

Securities

The SEC proposed modernizing advertising rules for investment advisors, which have not been significantly revised since the 1960s. The proposal would allow advisors to use marketing and communications methods that have become standard tools elsewhere in the economy.

Health

The Departments of Treasury, Labor, and Health and Human Services issued a final rule that will expand the use of health reimbursement arrangements (HRAs) and could encourage employers to offer workers access to health insurance brokers and private health insurance exchange programs. The House also voted to permanently repeal the Cadillac Tax.

STATE-LEVEL ADVOCACY

On the state front, NAIFA has been just as active in safeguarding your interests. To carry out this critical task, NAIFA has:

• A grassroots network extending through every statehouse and state regulatory agency

• Fifty state-level political action committees

• Professional advocacy staff in every state

• A proven track record of success on state issues affecting financial professionals and their clients across the country

To show the importance of state advocacy to NAIFA, the association’s CEO, Kevin Mayeux, began this year with a trip to Boston where he testified at a hearing before the Massachusetts Securities Division on some troubling aspects of the state’s proposed fiduciary rule for financial professionals. Along with colleagues from the ACLI, IRI and SIFMA, Mayeux spoke about how the proposal will impact Massachusetts consumers and make it more difficult for Main Street investors to obtain products, services and guidance.

The hearing was a showcase of NAIFA’s state advocacy strength. More than two dozen NAIFA-Massachusetts members packed the hearing room in support of Mayeux’s comments. Two clients of NAIFA member Adam Sachs, CFP, CLU, ChFC, testified at the hearing, and they provided compelling and well-received testimony. The next day, Gov. Charlie Baker wrote a letter to Secretary of the Commonwealth Bill Galvin citing many of NAIFA’s concerns and asking him to delay action on the proposal.

Adoption of the fiduciary duty regulation was viewed by most observers as inevitable, and the final regulation was adopted by the state in Feb. 2020. However, in response to the comment letters and hearing testimony provided by NAIFA and NAIFA Massachusetts, the final regulation does include several important modifications to the original proposal that will serve to lessen the adverse impact of this new rule on NAIFA members and their clients. These modifications include:

• The fiduciary standard of conduct will not apply to insurance producers or insurance products;

• Title restrictions, such as the presumption of a fiduciary duty being created by someone’s use of titles such as “advisor,” are no longer a part of the rule; and

• The instances in which the fiduciary duty will be an ongoing duty have been significantly narrowed down.

OTHER STATE-ADVOCACY EFFORTS

Meanwhile, advocacy efforts in other states are advancing at a rapid clip. A few examples from the early months of 2020 spotlight NAIFA’s state advocacy impact:

• NAIFA aided the effort to successfully discourage DC Council members from passing a troubling bill that would have broadly — and retroactively — expanded the coverage of business interruption insurance.

• NAIFA was instrumental in the collective charge for State Insurance Departments to issue temporary producer licenses post COVID-19.

• NAIFA helped lead the charge and was a key player in having Iowa and Arizona become the first states to adopt amendments to their requirements governing annuity transactions that will require producers and insurers to act in the best interest of annuity purchasers and to not put their own financial interests ahead of the consumers’ interest. The Iowa and Arizona revisions track amendments made earlier this year by the National Association of Insurance Commissioners to the NAIC Suitability in Annuity Transactions Model Regulation, which raises the standard of care required of financial professionals while preserving consumers’ access to valuable financial advice, services and products. NAIFA was an active participant in the development of the NAIC revisions and the adoption by the states of these amendments is a top advocacy priority for NAIFA.

• NAIFA helped to make key changes to an Indiana bill regarding the disclosure of agent commissions.

• NAIFA convinced legislators to make a critical fix to the Telephone Solicitation Act in Indiana.

• The New Jersey Governor signed into law a NAIFA bill that allows honorably discharged military veterans to have their initial insurance producer-licensing fee waived if they have passed the licensing exam.

• NAIFA played a significant role in an NAIC working group decision to not apply changes to permitted illustrations for indexed universal life policies to in-force contracts.

Federal advocacy victories, such as NAIFA’s work to pass the SECURE Act and see the Department of Labor’s fiduciary rule vacated, often garner bigger headlines, but many more issues affecting the success and prosperity of producers and their clients occur in the states. That is why NAIFA’s unique state advocacy prowess is so important and why the association will continue to make full use of this powerful weapon to produce positive outcomes for you and your business.

NAIFA works with lawmakers and regulators to make sure that you continue to serve Main Street families in their quest for a secure financial future.

Training Naifa Members

In addition to these major wins, NAIFA has been hard at work in providing advocacy training for NAIFA leaders and members. For example, the association’s leaders traveled to Washington D.C., for PAC and grassroots training last November. Attendees held about 200 meetings with key lawmakers and asked them to include the SECURE act in any year-end package and to utilize NAIFA as a resource for any health, tax and retirement reform efforts this year.

And earlier this year, NAIFA launched the Advocacy Action Center, which provides information on the association’s advocacy programs and the tools you need to become a politically active and involved advisor.

Through this site, you can:

• Unite your voice with thousands of other NAIFA members through IFAPAC to support candidates for state and federal office who understand the valuable role that advisors and agents play in securing America’s financial future.

Working With Key Players

State advocacy begins even before legislators and regulators propose bills or rules. With this in mind, NAIFA participates proactively in NAIC’s and NCOIL’s committees, contributing expertise and helping to formulate model statutes and regulations that shape the industry. The association influences these models, which states often enact verbatim. NAIFA exerts its influence to head off bad policies and encourage good ones before they become law.

A new, formal state-advocacy partnership between NAIFA and ACLI builds upon years of cooperation and highlights both groups’ understanding of how state laws and regulations impact the industry.

This partnership is initially concentrated in seven key states: California, Colorado, Florida, Illinois, Maryland, Massachusetts, and New Jersey. As part of the effort, NAIFA has bolstered its state advocacy staff. It is already beginning to see results on issues ranging from fiduciary proposals and state-run retirement plans to senior investor protections and genetic testing and client security proposals.

• Take action and contact legislators on active issues important to your industry.

• Report your relationships with your state and federal legislators and join NAIFA’s advocate network.

• Visit www.naifa.org today and get the tools and resources you need to improve and enhance your advocacy skills.

Also, in May, NAIFA hosted NAIFA Impact Week, an online event where thousands of financial professionals learned how to “lobby from their living rooms “ because of the safedistancing rules many of them are adhering to because of COVID-19. During this important meeting, attendees also received messages from numerous lawmakers recognizing them for the good they are doing in providing financial security for Americans and encouraging them to keep up the good work.

Apic And Ifapac

A major contributor to NAIFA’s advocacy success is the Advisor Political Involvement Committee, the only industry program that has a constituent for every member of

Congress. APIC efforts get agents and advisors involved both in their home states and in Washington, D.C.

NAIFA members also organize district meetings, attend town hall meetings and host candidate fundraisers through the association’s Political Action Committee, IFAPAC.

Looking Ahead

As lawmakers tried to do all they could to keep the economy from imploding during the first few weeks of COVID-19, they spent more than $2 trillion in federal relief legislation with more being considered. Regardless of the amount that is finally approved, one of the next steps from Congress will be figuring out how to pay for it all. And since this is an election year, the need for political engagement on your part has never been more critical.

As a key player in the industry, you need to be part of the conversations surrounding these issues, as well as other issues that will emerge. You need to show how your products and services provide financial security for millions of Americans and how your clients count on you for guidance and support.

As you take part in these conversations, rest assured that NAIFA will be with you every step of the way, using its expertise and influence to oppose harmful proposals that place undue burdens on you and champion those that protect and advance your interests.

This is what NAIFA has done successfully for 130 years, and this is what it will continue to do for the next 130 years.