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March 05, 2015 at 08:29 AM
The Investment Adviser Association’s top lobbyist told compliance officers Thursday to brace for two upcoming realities: the Department of Labor’s redraft of its rule to amend the definition of fiduciary will see the light of day, and changes to advisor exams are likely on the horizon.
Despite the “hue and cry” over the DOL’s redraft of its rule to amend the definition of fiduciary on retirement accounts, the redraft “will emerge” from the Office of Management and Budget, Neil Simon, IAA’s vice president for government relations, said at IAA’s annual compliance conference in Arlington, Virginia, just outside Washington.
While some rules fall into a “black box” while being reviewed by OMB and never reappear, the DOL’s fiduciary redraft “is not one of them,” Simon said.
Now that the Obama administration “has embraced” the DOL’s redraft to amend the definition of fiduciary under the Employee Retirement Income Security Act as part of its “middle-class agenda,” the redraft will be released by OMB after a 90-day review, he continued. Until then, while the “speculation” about what the redraft actually says can be “enlivening,” the outcry over the rule by lawmakers and industry opponents is “premature,” as “we simply don’t know what’s in it.”
Simon said he anticipates a different rule proposal from the one that was first released by DOL in 2010. “I think Labor learned its lesson after the 2010 proposal.”
As to advisor exams and whether there really is a problem with the Securities and Exchange Commission’s exam rate of advisors, Stephanie Monaco, partner at Mayer Brown, opined that she didn’t believe there is a problem in the exam rate.
But Simon said that “at the very least, there is a broadening political perception that the oversight of advisors is not sufficient.” In this post-Madoff era, he continued, “there is a sense from policymakers that something needs to be done” about the frequency of advisor exams, and the “political reality is that change is likely to occur and we should be ready to address it.”
