The news Friday that Secretary of Labor Thomas Perez was among the candidates being considered to replace Attorney General Eric Holder, who resigned last week, had industry officials speculating Monday if Perez’s exit could further delay the release of the Department of Labor’s fiduciary redraft.
“We’re proceeding under the assumption that there will be a proposal,” Dale Brown, president and CEO of the Financial Services Institute, said Monday at FSI’s 2nd Annual Advisor Summit in Washington.
Brown told ThinkAdvisor in comments after his speech that Phyllis Borzi, assistant secretary of Labor for the Employee Benefits Security Administration and the main architect of the DOL’s rule to amend the definition of fiduciary under the Employee Retirement Income Security Act, “is intent” on getting a fiduciary reproposal out, and that Perez’s potential move to the attorney general spot wouldn’t stop its release.
Mercer Bullard, founder of Fund Democracy and associate professor at the University of Mississippi School of Law, told ThinkAdvisor in an email message that “fiduciary duty stalwarts” will remain at DOL if Perez were to leave. “I don’t see [Perez’s potential departure] having any effect” on release of a fiducairy redraft, he said. “How much slower could it go?”
Indeed, an industry official says that Perez is seen as a “long shot” to succeed Holder and agreed that Borzi “is more critical” to DOL’s fiduciary redraft. Perez exiting DOL would have “minimal impact” on any fiduciary plan, the official said.
DOL has pushed release of its proposal to January, but Robert Lewis, FSI’s vice president of legislative affairs, noted at the summit that DOL’s redraft could come even later. He added that FSI is still “actively educating Congress” regarding FSI’s opposition to DOL’s fiduciary rulemaking and urged advisors to help.
“We don’t want the momentum to fade away,” Lewis said. “We have to continue to keep [lawmakers’] interest” in the DOL’s reproposal.
Perez told a Senate Appropriations subcommittee in mid-April that the redrafting of the fiduciary proposal “has been slowed down at my direction significantly because we wanted to take a step back [to] listen and learn from everyone.”
Perez noted, “We’ve been engaged in a significant amount of outreach, and I’ve met with a number of senators and congressmen on both sides of the aisle, and we’re going to continue to do that.”
Securities and Exchange Commission Chairwoman Mary Jo White told members of the Senate Banking Committee in early September that commission staffers continue to provide “regulatory expertise” to the DOL as it considers potential changes to the definition of fiduciary under ERISA.
On the state level, Lewis said that FSI is watching the trend of state-run retirement plans as well as equity crowdfunding, financial literacy and elder abuse bills being introduced in various states.
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