This past April, Sen. Elizabeth Warren (D-MA) opened an investigation into annuity sales practices by issuing surveys to 15 insurance companies responsible for 71 percent ($168 billion) of total 2014 industry sales. The goal of this inquiry was to determine the prevalence of awarding perks and prizes to advisers who sell high volumes of annuities, a practice that Sen. Warren claims creates a conflict of interest. According to Sen. Warren, these non-cash incentives cause advisers to be more interested in making the sale than in ensuring that the product sold is appropriate for the consumer.

In October, Sen. Warren published a report summarizing her “findings.” Thirteen of the 15 companies offer such incentives directly to agents, indirectly through third party gift payments, or both. But, according to Sen. Warren, no company clearly describes the nature and types of rewards in their annuity prospectuses. Nor is any company required to—the companies always complied with the various federal, state, and industry rules that apply to annuity sales. Current legislation permits companies to provide non-cash compensation for sales of a broad array of a company’s products. Thus, Sen. Warren concluded in her report that the award of perks and prizes is equally attributable to industry practice and to “loopholes” within the regulatory system.

In the report, Sen. Warren expressed her hope that the Department of Labor’s proposed rule regarding the definition of the term “fiduciary” will close these “loopholes.” If enacted, this rule would require that all advisers who give retirement advice specifically directed to an individual investor act in the best interests of their clients, and not for personal gain.