Conflicting Interests and the Effect of Fiduciary Duty: Evidence from Variable Annuities

• 成果类型: Article
• 署名作者: Egan, Mark; Ge, Shan; Tang, Johnny
• 署名单位: Harvard University; National Bureau of Economic Research; New York University; Harvard University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhac047
• 发表日期: 2022
• 页码: 5334
• 关键词: MORTGAGE-MARKET; BROKERS; COMPETITION; FRAUD; COSTS

摘要

We examine the variable annuity market to study conflicts of interest and the effect of fiduciary duty in brokerage markets. Insurers typically pay brokers higher commissions for selling more expensive annuities. Our results indicate that sales are four times as sensitive to brokers' interests as to investors'. To limit conflicts of interest, the Department of Labor proposed a rule in 2016 holding brokers to a fiduciary standard. We find that after the proposal, sales of high-expense products fell by 52% as sales became more sensitive to expenses. Based on our structural estimates, investor welfare improved overall.