In April 2024 the Labor Department finished a rule that would have changed who counts as a fiduciary when money moves out of a retirement account. It was scheduled to take effect that September. It never did. Two federal courts in Texas stayed it a day apart in July 2024, the government withdrew its own appeal in November 2025, and in March 2026 the department published a notice of court vacatur, restoring the five part test that had defined an investment advice fiduciary since 1975.

That sequence reads like a story about Washington. It is more usefully read as a story about which rulebook now governs the largest category of retirement product sold to Americans over sixty. The answer is a model regulation written by state insurance commissioners, and it says something most buyers would not guess from the brochure.

The Standard That Replaced the One That Vanished

The governing text is the National Association of Insurance Commissioners' Suitability in Annuity Transactions Model Regulation, revised in 2020 and since adopted in some form across the states. It requires a producer to act in the best interest of the consumer, without placing the producer's or the insurer's financial interest ahead of the consumer's.

Read three more sentences of the model and the phrase narrows considerably. The requirement does not mean the annuity with the lowest compensation must necessarily be recommended. It does not require analysis of products outside the authority and license of the producer. And it states plainly that these requirements do not create a fiduciary obligation or relationship, only a regulatory obligation. The training behind it is a one time, four credit, department approved course.

The Mechanics of a Product That Is Not a Security

That last distinction does most of the work. A fixed indexed annuity is not a security, which means it can be sold by someone holding a state insurance license and nothing else. No securities registration, no broker-dealer supervision, no investment adviser status. A registered index linked annuity or a variable annuity is a security, and selling one requires a registered representative under both the SEC and FINRA. Two products in the same folder can be sold under entirely different oversight regimes.

The interest crediting is where the design becomes unfamiliar. A fixed indexed annuity does not hold the index. It credits a formula tied to it, and the formula carries three common limiters. A participation rate credits only part of the move, so 75 percent participation on a 10 percent gain credits 7.5. A cap sets a ceiling, so a 7 percent cap on a 12 percent gain credits 7. A spread subtracts a set amount, so a 3 percent spread on a 9 percent gain credits 6. Underneath all three, the index return is generally calculated without the dividends paid by the companies in it, a meaningful share of what an index actually returns over time. And the insurer is commonly permitted to change the cap after purchase, against a guaranteed minimum that FINRA describes as typically at least 87.5 percent of premium growing at 1 to 3 percent.

Where the Compensation Actually Sits

None of that is hidden, and none of it is a scandal. The part worth tracing is how the sale gets paid for, because it never appears on a statement. The commission comes from the insurer rather than from the buyer's deposit, and the insurer recovers it through the contract's design. The surrender schedule is that recovery mechanism. The SEC describes surrender periods as typically six to ten years or even longer, and the Texas insurance department describes charges that start at about 10 percent and decline each year until the period ends.

Which is also why replacing one contract with another is regulated separately. Texas law makes it illegal for an agent to recommend a replacement simply to earn a commission, and regulators have been looking. Compliance reviews in 2024 found weaknesses in how insurers monitor their own producers, and the NAIC's suitability working group is drafting guidance in response. Industry groups say the 2020 standard works. The CFP Board calls it fundamentally flawed for imposing no fiduciary duty and not treating compensation as a material conflict.

What the Buyer Is Left Holding

Sales have not slowed. Total annuity sales reached about 464 billion dollars in 2025, up 7 percent, with fixed indexed annuities at a record 128 billion.

The federal standard that would have called this advice was vacated before it ever applied, and what governs in its place is a sales standard that says in its own text that it is not a fiduciary duty. Two questions settle most of what matters before anything gets signed. Which license does the person across the table hold, since that determines who supervises them and which products they may discuss at all, and what does the surrender schedule look like year by year, since that is the number that says when the money becomes available again.

— John Stone