AB654,6,8 8. Existing assets and financial products, including investment, annuity, and life insurance holdings.

AB654,6,10 11. Risk tolerance, including willingness to accept non-guaranteed elements in the annuity.

AB654,11 Section 11 . 628.347 (2) of the statutes is repealed and recreated to read:

AB654,6,21 628.347 (2) Best interest obligations. (a) When making a recommendation of an annuity, an insurance intermediary shall act in the best interest of the consumer under the circumstances known at the time the recommendation is made, without placing the financial interest of the intermediary or insurer ahead of the consumer's interest. An insurance intermediary has acted in the best interest of the consumer if the intermediary has satisfied the care obligation under sub. (2b), the disclosure obligation under sub. (2c), the conflict of interest obligation under sub. (2d), and the documentation obligation under sub. (2e). The requirements under this subsection and subs. (2b) to (2e) create only a regulatory obligation and do not create a fiduciary obligation or relationship.

AB654,7,4 (b) Any requirement applicable to an insurance intermediary under this subsection shall apply to every insurance intermediary who exercises material control or influence in the making of a recommendation and has received direct compensation as a result of the recommendation or sale, regardless of whether the intermediary has any direct contact with the consumer. Activities such as providing or delivering marketing or educational materials, product wholesaling or other back office product support, and conducting general supervision of an insurance intermediary do not, in and of themselves, constitute material control or influence.

AB654,12 Section 12. 628.347 (2b) of the statutes is created to read:

AB654,7,8 628.347 (2b) Care obligation. (a) In making a recommendation, an insurance intermediary shall exercise reasonable diligence, care, and skill to do all of the following:

AB654,7,10 1. Know the consumer's financial situation, insurance needs, and financial objectives.

AB654,7,12 2. Understand the available recommendation options after making a reasonable inquiry into the options available to the intermediary.

AB654,7,16 3. Have a reasonable basis to believe the recommended option effectively addresses the consumer's financial situation, insurance needs, and financial objectives over the life of the product, as evaluated in light of the consumer profile information.

AB654,7,17 4. Communicate the basis or bases of the recommendation to the consumer.

AB654,7,19 (b) The requirements imposed on an insurance intermediary under par. (a) include all of the following:

AB654,7,22 1. Having a reasonable basis to believe the consumer would benefit from certain features of the annuity, such as tax-deferred growth, annuitization, a death or living benefit, or other insurance-related features.

AB654,7,24 2. Making reasonable efforts to obtain consumer profile information from the consumer prior to the recommendation.

AB654,8,8 3. Considering the types of products the intermediary is authorized and licensed to recommend or sell that address the consumer's financial situation, insurance needs, and financial objectives. Nothing in this subdivision requires analysis or consideration of products outside the authority and license of the intermediary or other possible alternative products or strategies available in the market at the time of the recommendation. Under this subdivision, an intermediary shall be held to standards applicable to intermediaries with similar authority and licensure.

AB654,8,12 (be) If consumer profile information is obtained by an insurance intermediary, the insurance intermediary may not conceal the information from the insurer, and an insurance intermediary may not otherwise dissuade or attempt to dissuade the consumer from providing the information.

AB654,8,16 (c) The requirements under this subsection shall apply to the annuity as a whole, the underlying subaccounts to which funds are allocated at the time of purchase or exchange of the annuity, and any riders and similar product enhancements.

AB654,8,22 (d) The factors generally relevant in determining under this subsection whether an annuity effectively addresses the consumer's financial situation, insurance needs, and financial objectives shall be the consumer profile information, characteristics of the insurer, and product costs, rates, benefits and features. The level of importance of each factor may vary depending on the facts and circumstances of a particular case, and no factor may be considered in isolation.

AB654,8,24 (e) Nothing in this subsection requires that an annuity with the lowest one-time or multiple occurrence compensation structure be recommended.

AB654,9,4 (f) Nothing in this subsection requires that the insurance intermediary have an ongoing monitoring obligation, although such obligation may be separately owed under the terms of a fiduciary, consulting, investment advising, or financial planning agreement between the consumer and intermediary.

AB654,9,7 (g) In the case of an exchange or replacement of an annuity, the insurance intermediary shall consider the whole transaction, which includes taking into consideration all of the following:

AB654,9,11 1. Whether the consumer will incur a surrender charge, be subject to the commencement of a new surrender period, lose existing benefits, including death, living, or other contractual benefits, or be subject to increased fees, investment advisory fees, or charges for riders and similar product enhancements.

AB654,9,13 2. Whether the replacing product would substantially benefit the consumer in comparison to the replaced product over the life of the product.

AB654,9,15 3. Whether the consumer has had another annuity exchange or replacement, particularly within the preceding 60 months.

AB654,9,17 (h) 1. Subject to subd. 2., an insurance intermediary shall have no obligation to a consumer under this subsection if any of the following applies:

AB654,9,18 a. The intermediary made no recommendation.

AB654,9,20 b. The intermediary made a recommendation that is later found to have been prepared based on inaccurate material information provided by the consumer.

AB654,9,22 c. The consumer refuses to provide relevant consumer profile information and the annuity transaction is not recommended.

AB654,9,24 d. The consumer decides to enter into an annuity transaction that is not based on a recommendation made by the intermediary.