(Boston)

Anyone who sell variable annuities, or even has a passing familiarity with the business, know that the headline above is a controversial one. The reason why is that the first version of the DOL rule caused annuities sales to drop. Even though that rule was vacated, it had already changed the structure of the market. However, Harvard is now saying the rule actually helped the VA industry. It says fees were lower and returns higher, that the rule did not force smaller investors out of the market, and that captive brokers put more weight on client interests. However, those in the annuity industry say the report is completely biased and that the researchers went in with the intention of proving the exact points they already assumed were true. Critics cited a number of flaws with the study, such as the methodology for calculating expenses and commissions.

FINSUM: While it is clear that variable annuity product suites, including fees and commissions, came down because of the rule, it does not seem clear that it helped everybody in general because of differing market access based on investor size.