3 Issues That Will Dominate DOL Fiduciary Debate

DOL has ‘bitten off such a huge issue,’ it will take a lot of time to get through the reproposal, Campbell of Drinker Biddle says

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Brad CampbellPay close attention to three areas of the Department of Labor’s reproposed fiduciary rule once it’s released in July, says Brad Campbell, former head of the DOL’s Employee Benefits Security Administration.

First will be the new prohibited transactions exemptions, “and what they will allow,” said Campbell (left), who’s now an attorney with the Financial Services ERISA Team at Drinker Biddle & Reath in Washington, on the law firm’s Inside the Beltway conference call Tuesday.

Fred Reish, head of Financial Services ERISA team at Drinker Biddle, who was also on the call, said that “the fiduciary aspects” of the DOL’s proposal were “manageable” and agreed with Campbell that “the prohibited transactions” in the revised rule would be “where the rubber hits the road.” Going forward, he said, “the debate will be in the prohibited transaction issues.”

The next area to focus on will be how EBSA applies the rule to the IRA marketplace, which was included in the previous draft. This will “change how providers interact with [IRA] holders,” Campbell said.

The revised rule will also include new rules on the rollover solicitation process, Campbell said. “I suspect that [EBSA will say] a conversation about a rollover is a fiduciary conversation,” he said. If this is part of the revised rule, “that would present a lot of real difficulties and changes for rollovers.”

Campbell told conference call listeners that the “significance” of EBSA’s fiduciary rule “is less about the way you make a decision or the quality of the advice, but the business model behind you.”

DOL, in changing the definition of fiduciary under the Employee Retirement Income Security Act (ERISA), has “bitten off such a huge issue that we’re going to have to spend a lot of time to get through [the reproposed rule] within the 60 to 90 comment period,” Campbell said.

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So how do advisors themselves feel about a stronger fiduciary standard for all advisors, and how are they “putting clients first” absent a single standard? We invite you to participate in the third annual fiduciary survey sponsored by AdvisorOne and Fi360.—Ed.

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