February 7, 2011

Sen. Harkin to DOL: Hold Retirement Plan Advisors to Strict Fiduciary Rules

DOL to hold March 1 hearing on proposed changes to term 'fiduciary'

Sen. Tom Harkin, D-Iowa, chairman of the Committee on Health, Education, Labor and Pensions (HELP), is urging the Department of Labor (DOL) to hold retirement plan advisors to the highest fiduciary standards.

In a letter to Phyllis Borzi, Assistant Secretary of Labor for the Employee Benefits Security Administration (EBSA), Harkin said that “Bad investment advice threatens the retirement security of all Americans, so it is absolutely critical that retirement plan advisers be held to the highest standards under the law.”  

EBSA plans to hold a public hearing on March 1 in Washington on its proposed amendments to the term “fiduciary.” If necessary, EBSA says the hearing will also be held on March 2. The Securities and Exchange Commission (SEC) delivered its report on fiduciary duty to Congress on Jan. 21.

Harkin, who’s been instrumental in pushing for enhanced 401(k) fee disclosures, offered the following comments to DOL regarding its proposed regulation regarding fiduciary:

  • We strongly support the Department’s decision to re-examine the types of advisory relationships that give rise to fiduciary status;
  • Fiduciary status for advisers should not be conditioned on the advice (i) being provided on a “regular basis” or (ii) serving as the “primary basis” for investment decisions;
  • Any limitations on fiduciary status should be narrowly tailored to address specific situations, and parties relying on the limitations should be required to fully disclose that information being provided is not fiduciary investment advice; and
  •  “Investment advice” should be construed broadly to include recommendations regarding plan distributions, the management of securities, investment manager selection, and asset allocation.
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