SEC to Seek More Input on Target-Date Fund Marketing Rules

The Securities and Exchange Commission is moving forward with its proposal on target-date retirement fund advertising by seeking further comment before proposing a rule, SEC Chairwoman Mary Jo White said Friday.

“I have directed the SEC staff to develop a request for additional comment for the commission’s consideration, so that we can benefit from additional feedback prior to proceeding with adopting final rules,” White said during a speech at a Consumer Federation of America event.

White noted that in 2010, the commission proposed rules to address concerns about investor understanding of the risks in target-date funds.

The proposed 2010 rules, titled Investment Company Advertising: Target Date Retirement Fund Names and Marketing, would require funds to disclose their asset allocations and how the investment mix changes over time. They would also be required to state to investors that a target-date retirement fund should not be selected based solely on age or retirement date, is not a guaranteed investment, and the stated asset allocations may be subject to change.

In April 2013, shortly after White took the helm as chairwoman, the commission’s Investor Advisory Committee submitted “a very useful set of findings and recommendations on target-date funds.”

White also noted the importance of the commission deciding “whether and how” to exercise the authority provided under Section 921 of the Dodd-Frank Act to “limit or eliminate mandatory predispute arbitration agreements.”

White also reiterated the importance of considering “carefully whether the regulatory distinctions [between advisors and broker-dealers] make sense” before moving ahead to use the authority under Section 913 of Dodd-Frank to create a uniform fiduciary standard rule.

“The question of whether and how to use this authority is very important to the commission and to investors,” White said.

White said that she has directed SEC staffers to evaluate “all of the potential options available to the commission, including a uniform fiduciary standard for broker-dealers and investment advisors when dealing with retail customers, and other measures that may be more targeted and achievable in the shorter term.”

Said White: “I have made this a priority because it is very important and we need to move forward to a decision.”