-----Original Message-----

From: william_morello@newyorklife.com [mailto:william_morello@newyorklife.com] 

Sent: Tuesday, July 07, 2015 8:42 AM

To: EBSA, E-ORI - EBSA

Subject: RIN 1210-AB32 - U.S. Department of Labor’s Proposed Fiduciary Rule

Mr. William R. Morello

27 Magellan Avenue

Kings Park, NY 11754-3801

7/7/2015

Dear Secretary of Labor Perez:

Dear Secretary Perez:

I write to express my concern with the Department of Labor’s proposed fiduciary rule (RIN 1210-AB32).

I work for New York Life Insurance Company. We are a 170 year old mutual life insurer. We have no 

shareholders – which allows us to focus on the long term and means we have no constituency other 

than our policyholders. Our focus is on meeting our promises in 10, 20 or even 50 years to see our 

policyholders through retirement and pay benefits to their beneficiaries. 

While New York Life supports the DOL’s goal in developing a best interest standard, the current proposal 

is unworkable. This proposal will impede the ability of savers to obtain lifetime income guarantees and 

to receive guidance from our expert career agents about how to avoid outliving their savings. The 

lifetime income products that New York Life offers help retirees replicate the private sector pensions 

that previous generations relied upon. No matter how long our clients live, we pay them a guaranteed 

income each month. And we pay out more than $1 billion in such payments each year.

The guidance of our agents is crucial for savers who are making one of the most important financial 

decisions of their lives. Savers and retirees need more guidance, not less. 

Under this rule, to provide advice in the “best interest,” the adviser must provide advice that: “Reflects 

the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person 

would exercise based on the investment objectives, risk tolerance, financial circumstances, and needs of 

the retirement investor, without regard to the financial or other interest of the adviser, financial 

institution, any affiliate or other party.”

PROBLEMS WITH PROPOSAL

The proposed rule would restrict access to such guidance and guarantees in several ways:

1. Could Effectively Prohibit Access to Top Quality Proprietary Products like Lifetime Income: The rule 

limits retirees’ access to guidance and proprietary products, including New York Life’s lifetime income 

guarantees. In contrast to the implications of DOL’s proposal, the sale of New York Life products by a 

New York Life agent is not a “conflict of interest.” Our agents have been trained to understand and 

explain our products. Our agents sell New York Life products because we have been keeping our 
promises to policyholders for 170 years and because New York Life is one of only two life insurers with 

the highest possible financial strength ratings from all four major credit rating agencies. 

While the Department of Labor has long recognized the value of guaranteed income products and 

pursued policies to promote their use, this rule would have the opposite effect.

2. Limits Access for Low Balance Savers: The proposal will be particularly harmful to low balance savers, 

as the proposal implies that commission-based compensation is incompatible with a client’s best 

interest. 

However, commissions are the most affordable way for low balance savers to pay for investment advice 

and access certain products. For example, commissions are the only compensation structure that is 

compatible with guaranteed lifetime income products, which are designed to spend down assets. Over 

the 10-15 year life of our lifetime income products, an agent’s one-time upfront commission translates 

to about .25 - .5% annually, which is much more affordable than the typical 1% annual fee for managed 

accounts. 

If small savers are unable to access commission-based advice, they will be forced to move into more 

expensive advisory models or access a roboadvisor and lose access to personalized financial advice from 

a trained professional.

CHANGES ARE NEEDED

Because I support the concept of a best interest standard, I urge the Department of Labor to make the 

following changes to make the proposed rule workable for savers and retirees:

1. Explicitly and affirmatively clarify that the sale of proprietary products and receipt of differential 

compensation (e.g. commissions and health benefits) are consistent with the Impartial Conduct 

Standard required under the Best Interest Contract Exemption (BICE) and revised PTE 84-24. 

2. Remove language creating an unworkable standard that threatens the sale of proprietary products by 

commissioned professionals. The proposed rule states that to qualify for the BICE and the Impartial 

Conducts Standard included in the revised PTE 84-24, the adviser must provide advice that is “without 

regard to the financial or other interest of the adviser, financial institution, any affiliate or other party.” 

Removing this language and inserting language consistent with the existing ERISA duties of prudence 

and loyalty under Section 404, with its well-established, judicially sanctioned safe harbors, would help 

fix a key problem that makes the rule unworkable and creates a chilling effect on much needed 

retirement planning assistance and guaranteed income products for the middle class. 

3. Provide clear guidance and examples regarding compliant sales practices involving proprietary 

products and differential compensation.

I urge the Department to re-write this unworkable rule to achieve the goal of helping American retirees 

achieve a secure retirement, rather than undermining that goal. As written, the rule significantly limits 

American retirees’ access to expert, individualized guidance and to lifetime income guarantees. Finally, I 

encourage the Department to carefully consider New York Life Insurance Company’s more 

comprehensive comment letter that will be submitted to the Department.

In closing, "best interests" does not equal "cheaper", which is what this proposed rule requires.
Thank you for considering my comments.

Sincerely,

Mr. William R. Morello