Suitability Simplified—or Standards Softened? What Advisors Need to Know About ACLI’s Latest Push

Let’s start with the obvious: navigating suitability rules in today’s retirement landscape is like playing three-dimensional chess blindfolded. Advisors juggle NAIC annuity standards, SEC Reg BI, the DOL’s shifting fiduciary rules, and state-specific overlays—all while trying to do the right thing for clients.

So when the American Council of Life Insurers (ACLI) calls for streamlined, unified suitability standards across all retirement products, it’s tempting to cheer.

But here’s the catch: simplification, if done wrong, can become code for weakening consumer protections.

Let’s break down what’s happening, why it matters, and what you should be watching for.

What’s the Proposal?

On July 15, 2025, ACLI submitted a formal proposal to state regulators urging the creation of a uniform national suitability framework that would cover:

• Annuities

• IRAs

• Life insurance used for income strategies

• Other retirement-related products

The stated goal? To reduce advisor confusion, cut compliance costs, and make it easier to deliver products to retirement savers—especially the “middle market” who often fall through the cracks.

In ACLI’s words, “Regulatory fragmentation discourages product innovation and limits access to guaranteed income solutions.”

The Pushback

Not everyone’s sold on the idea.

The Insurance Information Institute (III) and several consumer advocacy groups responded with caution, if not outright concern. Their key issue?

“Unifying standards sounds good—until you realize it might mean adopting the lowest common denominator,” says one III analyst.

Here’s the concern: If the final result is a framework that mirrors NAIC’s Suitability in Annuity Transactions Model—which is weaker than a fiduciary duty—then advisors could be legally compliant while still failing to act in a client’s best interest.

What’s Actually at Stake?

Let’s get real for a moment. Advisors across the country operate under a hodgepodge of rules:

• NAIC Model Reg: Applies to annuities in most states.

• SEC Reg BI: Applies to broker-dealers and registered reps.

• DOL fiduciary rule: Applies to retirement plans and rollovers—but enforcement is murky.

• State-specific fiduciary laws: New York, Massachusetts, and others are carving their own paths.

That’s a lot of hats for one advisor to wear—and ACLI is right to point out that this complexity creates confusion and potential liability.

But here’s the tension: simplifying the system shouldn't mean stripping it of client-first obligations.

Professional-Centric Takeaways

1. Harmonization Could Be a Win—If It Raises the Bar
Imagine a world where one clearly defined, enforceable best-interest standard applies to all retirement income products. Compliance would be simpler. Training would be clearer. Client trust would grow.

That’s the dream—but the current proposal isn’t quite there yet.

2. Beware of Suitability Lite
If this unified standard ends up codifying the “suitability with disclosure” model, we could see a slide back toward transactional sales practices. For complex products like annuities, that’s a problem.

Your planning-focused clients want and deserve advice held to a higher bar—whether you’re selling an FIA, a variable annuity, or building a lifetime income plan with life insurance.

3. Expect a Political Battle Ahead
This isn’t just a policy proposal. It’s a regulatory turf war, and the outcome will be shaped by trade associations, lobbyists, and evolving SEC and DOL leadership.

Supporting Data & Trends

• 43 states have adopted the NAIC annuity suitability model—but enforcement varies widely.

• $24B+ in annuity sales annually face multi-layered compliance hurdles, especially for advisors dually registered with BD and RIA firms.

• A recent LIMRA/Finesca survey shows 71% of advisors want clearer, more consistent standards—but 84% also support fiduciary-level obligations for retirement products.

Ethical Lens: Whose Simplicity Is It Anyway?

It’s easy to say consumers benefit from simpler standards. But we have to ask: who really benefits most from simplification if it comes at the cost of removing advisor accountability?

As an industry, we’ve worked hard to build trust. Sliding backward—under the banner of convenience—would hurt the very people we claim to serve.

What Should Advisors Do Now?

1. Lead with Fiduciary Behavior—Regardless of Regulation
Your clients won’t remember what standard governed your recommendation. They’ll remember whether you listened, explained, and helped them make decisions in their best interest.

2. Stay Educated on Regulatory Shifts
If you’re working across multiple states or product lines, expect changes. A uniform framework could disrupt how you document, disclose, and defend your advice.

3. Advocate from the Field
Reach out to professional organizations, trade groups, and regulators. Make your voice heard—not as a salesperson, but as a professional who wants clarity and consumer confidence.

Final Thought: Standards Are Strategy

What we’re really debating isn’t compliance—it’s credibility. Your ability to lead in this industry hinges not on how well you navigate red tape, but on how deeply you commit to being worthy of your clients’ trust.

Uniform standards? Sure. But let’s make sure they’re the right standards.