California Gov. Gavin Newsom introduced at the moment that he has signed state Senate Invoice 263, a invoice adopting the Nationwide Affiliation of Insurance coverage Commissioners’ annuity gross sales customary replace.
The signing makes California the forty fifth state to undertake the NAIC mannequin replace, which is predicated on the U.S. Securities and Trade Fee’s Regulation Greatest Curiosity.
The mannequin replace requires sellers of annuities to behave within the client’s finest curiosity and disclose potential conflicts of curiosity, but it surely doesn’t require the vendor to behave as a fiduciary or to maneuver away from accumulating gross sales commissions.
The mannequin stands in opposition to the U.S. Division of Labor’s proposed fiduciary definition proposals, which might impose a fiduciary customary of care on any people and corporations offering funding recommendation to shoppers who’re rolling property over from 401(okay) plans, particular person retirement preparations and different retirement accounts.
Present California guidelines require annuity sellers to fulfill a suitability customary and to confirm that the annuities offered to shoppers meet their wants.
What it means: Newsom is a Democrat and the chief of essentially the most populous U.S. state. His determination to signal SB 263 could weaken the Biden administration’s efforts to finalize and implement the DOL’s proposals.
SB 263: California Insurance coverage Commissioner Ricardo Lara, an elected Democrat, backed adoption of the NAIC mannequin replace in California.