More On Legal & Compliancefrom The Advisor's Professional Library
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
- Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm. States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.
On Tuesday, a coalition of interested parties took to their pens to urge the Department of Labor to allow plan sponsors to make required disclosures electronically. A coalition of 15 trade organizations, including ASPPA, the Financial Services Institute, the Investment Company Institute and SIFMA, wrote a letter to the Employee Benefits Security Administration to argue for a policy that recognizes “electronic communication today is no longer the exception, it is the norm.”
A survey by the SPARK Institute, one of the coalition members, found that interim guidance released by the Labor Department in December does not make electronic disclosure more feasible and lacks incentives for plan sponsors to use it instead of paper disclosures.
“We encourage the Department to pursue a policy that, in operation, would encourage and facilitate the use of modern electronic forms of communication,” the coalition wrote in the letter. “Such a policy would have a direct and beneficial impact on plans, plan sponsors, plan participants and beneficiaries.”
Technical Release 2011-03R clarifies earlier guidance released in September about using electronic media to satisfy disclosure requirements. The revised release is otherwise identical to the earlier issuance, TR 2011-03.
“We are concerned that the guidance in the Technical Release provides little relief beyond that already available through EBSA’s current safe harbor, particularly as it relates to affirmative consent and dependence on paper as the default method of delivery,” Larry Goldbrum, general counsel of The SPARK Institute, said in a statement. “Based on responses to the survey and discussions with other coalition members, it is clear that a substantial majority of service providers do not intend to make use of the Technical Release policy and the required disclosures will be delivered in paper form, rather than electronically.”
Among the chief concerns of the coalition are:
- Existing systems’ inability to support Labor’s interim e-delivery approach without costly changes
- Requiring each participant to approve electronic communications
- The administrative impracticality of the required implementation and monitoring
Rather than relying on Labor's guidance from September and December, the coalition would defer to the agency’s Field Assistance Bulletin 2006-03 released in December 2006. That guidance states that “a pension benefit statement may be delivered in written, electronic, or other appropriate form to the extent such form is reasonably accessible to the participant or beneficiary.” According to the coalition’s letter, FAB 2006-03 provides “a viable approach to encouraging and fostering electronic disclosure by employee benefit plans, while providing important safeguards for ensuring that participants who still want to receive required disclosures in paper format can do so.”
Brian Graff, CEO and executive director of ASPPA, noted that other government organizations have transitioned to electronic delivery of important documents. “For example, IRS makes tax forms available online now instead of mailing them. The DOL should join IRS and many other federal agencies embracing e-delivery for the benefit of investors and customers,” Graff said in a statement. “Making e-delivery more available can also help to keep the costs of retirement plans down by cutting down on paper statements that have to be prepared and mailed,” he added.
Despite the benefits to plan sponsors, the coalition believes that electronic disclosure is preferred by participants themselves.
“Research shows that participants of all ages and incomes increasingly prefer to access information online and we believe that doing so makes it easier for participants to act on the information,” David Abbey, senior counsel for pension regulation at the Investment Company Institute, said in a statement.
The coalition is made up of the American Bankers Association, American Benefits Council, American Council of Life Insurers, American Society of Pension Professionals & Actuaries (ASPPA), Financial Executives International Committee on Benefits Finance, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute, Investment Company Institute, Plan Sponsor Council of America, Securities Industry and Financial Markets Association, Small Business Council of America, The ERISA Industry Committee, The SPARK Institute and the U.S. Chamber of Commerce.
A PDF of the coalition's full letter is available here.