(Bloomberg) -- U.S. Senator Elizabeth Warren has a new target: the biggest sellers of annuities and the diamond- encrusted rings, iPads, stock options and cruises she says they're using to entice brokers to sell their investments.
Warren, the Massachusetts Democrat and prominent critic of Wall Street, is planning to send letters Tuesday to the U.S.'s 15 largest annuity providers, her office said. She wants to know whether perks they provide encourage brokers to put personal interests ahead of the retirement goals of clients.
"I am concerned that these incentives present a conflict of interest for agents and financial advisors that could result in these agents providing inadequate advice about annuities to investors and selling products that may not meet the retirement investment needs of their buyers," Warren said in the letters, which were slated to go to companies including Prudential's Jackson National Life, American International Group and Lincoln National.
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Spokesmen for those companies, and spokesmen for the American Council of Life Insurers and the Securities Industry and Financial Markets Association had no immediate comment or didn't immediately respond to requests for comment.
FOOTBALL RINGS
In the letters, Warren said car leases, National Football League Super Bowl-style rings and other perks are widely known in the industry and appear to be "kickbacks directed at annuity agents and brokers." Warren's office is asking the companies to provide by May 11 a list of all incentives offered to middlemen.
Warren is latching onto incentives in the $235 billion market for annuities to build support for proposed Labor Department regulations that require brokers to act in their retirement clients' best interest, a standard known as a fiduciary duty. The proposal issued this month is expected to face stiff opposition from Wall Street, Republicans and some Democrats.
President Barack Obama endorsed Labor's plan in February, putting new momentum behind the effort to revise rules that affect tens of millions of baby boomers nearing retirement age and workers who don't have pension plans.
The new protections would save investors $40 billion in fees over 10 years, according to the Labor Department. At present, brokers face a less-stringent suitability standard that requires investments fit a clients' needs and risk tolerance.
RISKY INVESTMENTS
Financial industry lobbyists have argued that costlier regulations could take options away for smaller investors.
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Investor advocates have warned for years that some annuities carry high fees and big penalties for early withdrawals that make them risky investments for people nearing the end of their lives.
Warren also planned to send the letters to Allianz's U.S. life division, TIAA-CREF, New York Life Insurance, Prudential Financial, Aegon NV's Transamerica, Axa's U.S. unit, MetLife, Nationwide Mutual Insurance, Pacific Life Insurance, Forethought Financial Group, Riversource Life Insurance and Security Benefit Life Insurance.
She is a member of the Senate Banking Committee, which plans to hold a Tuesday hearing on insurance regulation.
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