On the same day Phyllis Borzi, DOL Assistant Secretary for Employee Benefits Security Administration, testified before Congress, Dale Brown, president and CEO of the Financial Services Institute, released a blunt statement on the DOL’s proposed fiduciary rule, calling it “troubling that we have reached this point in the process, and yet there appear to be no apparent prospects for a change of course.”
“A strong bipartisan consensus of nearly 100 Democratic and Republican members of the House and Senate have sent letters to the Department of Labor urging them to slow down and study the impact before moving this rule forward,” Brown writes in the statement. “Unfortunately, the Department has not responded to these concerns, and has refused to even acknowledge the need for more study.”
Brown goes on to write that the DOL’s proposal will have a negative impact on the level of access lower income Americans, in particular, have to financial advice. Brown cites the unintended consequences to the 19 million IRA account holders and participants in the more than 600,000 covered plans who are planning for their retirement.
“The simple fact is, if this rule was to become reality, advisors would lose their ability to be compensated through commissions on advice given to investors with IRAs and would no longer be able to help many hard-working Americans plan for retirement,” he adds. “When it comes to providing affordable, unbiased, independent financial advice to millions of Main Street Americans, you cannot over-study this matter.”
He then called for the rulemaking process to be suspended until a comprehensive impact assessment had been completed.
Lawmakers told Phyllis Borzi (left), head of the Department of Labor’s Employee Benefits Security Administration (EBSA) on Tuesday, to repropose the agency’s controversial regulation amending the definition of fiduciary under the Employee Retirement Income Security Act (ERISA), because the definition offered is too broad and because EBSA failed to examine the full cost of expanding the definition.
“As it stands now, this proposal is a lose-lose, both for advisors and more importantly, consumers,” Brown concludes. “As we have said from our first engagement in this process several months ago, FSI stands ready to work with DOL to specifically address concerns with the sale and servicing of retirement accounts. Withdrawal of the current proposal is the first step in that process.
Rep. Phil Roe, R-Tenn., chairman of the House Subcommittee on Health, Employment, labor and Pensions said the current proposal “is an ill-conceived expansion of the fiduciary standard.”