After much anticipation, Oliver Wyman released to the DOL and the SEC in early April the data underlying its report stating that applying a fiduciary standard to IRA recommendations is costly.
As part of its economic analysis on the redraft of the rule amending the definition of fiduciary under ERISA, DOL’s Employee Benefits Security Administration (EBSA) sent out two data requests: one issued on Dec. 16 for the data underlying the Oliver Wyman report; and a request from EBSA’s Office of Policy Research on Dec. 15 that industry trade groups voluntarily assist EBSA in its expanded “regulatory impact analysis.”
EBSA has complained about Oliver Wyman’s reluctance to release the data, but Kent Mason, (left), a partner at the law firm Davis & Harman, who represents the companies that participated in the study, told Investment Advisor that a confidentiality agreement kept Oliver Wyman from releasing the data sooner.
A DOL spokesman told Investment Advisor in early April that DOL had received the Oliver Wyman data and was reviewing it. Phyllis Borzi, assistant secretary for EBSA, has remained steadfast in her determination to include IRAs in the fiduciary duty redraft. She told Investment Advisor that “all of the information will be available to the public in a completely transparent way once we publish the new proposed regulation.”
As Mason explained to EBSA’s Office of Policy Research in an April 5 letter, the data underlying the Oliver Wyman study includes information on over 19 million IRA holders who hold $1.79 trillion in assets through 25.3 million IRA accounts. This, he said, constitutes approximately 40% of IRAs in the United States and 40% of IRA assets.
In particular, Oliver Wyman was asked to evaluate the potential impact of the DOL’s proposed rule change on smaller retail IRA investors regarding access to: investment help and services from a licensed investment professional; choice of investment professional; relationship model in terms of commission-based brokerage versus single fee; “wrap” investment advisory accounts, as well as breadth of product choice; and cost impact to IRA holders.