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Regulation and Compliance > Federal Regulation > SEC

Incompatibility Is Standard

By thinkadvisor

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“It is critical the [fiduciary] standards of conduct put out by the SEC and DOL applicable to investment professionals be compatible,” Bill Lowe, president of Sammons Retirement Solutions, told the SEC in his June 4 comment letter.

“Both standards,” he argued, “must allow for multiple business models so investors are free to choose from a robust market of investments, investment professionals and how they choose to compensate their investment professional.”

Yet, Phyllis Borzi, assistant secretary for the Department of Labor’s Employee Benefits Security Administration and former SEC Chairwoman Mary Schapiro, as well as current SEC chair Mary Jo White, have each stated that collaboration on their fiduciary rules can only go so far as each agency is held to different statutes.

That said, Borzi commented in May that the anticipated release in July of DOL’s fiduciary redraft would be pushed off for a couple more months.

Lowe said in his comment letter that “some interpretations” of the DOL’s previous proposal said it “would have effectively barred commission-based compensation.” Confusion among retail investors would surely ensue, he said, “if their investment professional is able to assist them on non-retirement assets but could not give advice or consideration to their retirement assets” like IRAs or other retirement plans.

“The incompatibility of the standards between the DOL and the SEC would confuse and frustrate retail investors and defeat the purpose of the proposed regulations,” Lowe said.

Confusion between the SEC and DOL standards, Lowe continued, “will discourage investment professionals from providing services to IRA and retirement plan assets, disproportionately impacting middle class and small balance investors. Decreasing access to financial guidance at a time when there is a shortage of investment professionals and an increase in investors in need of financial guidance is certainly not the desired outcome.”

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