Washington Analysis predicts the DOL will prevail.

Lawmakers continue to point out problems with the Department of Labor’s proposed rule to revamp the definition of fiduciary on retirement advice as DOL plans to conduct a series of hearings on the reproposal starting Monday.

Sen. Claire McCaskill, D-Missouri, laid out in a Wednesday letter to Labor Secretary Tom Perez her list of concerns about Labor’s proposed rule to redefine fiduciary under the Employee Retirement Income Security Act.

While complaints about DOL’s plan have come from both sides of the aisle, observers at Washington Analysis predict that while it will be Republicans who will continue to “aggressively” push legislative proposals like requiring the Securities and Exchange Commission to finalize a rule before DOL and defunding DOL’s plan, such efforts will not prevail and DOL will “finalize” its fiduciary rule in early 2016.

McCaskill told Perez in her Wednesday letter that while she applauds DOL “highlighting the need for a universal best interest standard for retirement advice,” and that while there should be a uniform standard for investments, distributions and rollovers, there are “risks” in DOL’s proposal.

First, she said, the plan “risks forcing more investors away from the current brokerage model and toward an investment advisory account model,” which she argues is “more expensive, and quite possibly unaffordable for holders of small accounts.”

She said that “given a limited choice of only the more expensive advisory account model, more individuals may completely lose access to in-person advice.”

The plan also appears to prohibits rollover advice, McCaskill said, which will lead to more leakage from retirement plans. Investors “looking for assistance” when transitioning their retirement plans from employers “are essentially cut off from advice from an investment professional” under the plan.

A “simple conversation with an investment professional should be protected” under DOL’s plan, McCaskill said.

What’s more, the education exemption language in the proposed rule “severely restricts educational conversations with investors,” McCaskill told Perez. Under the plan, the “act of describing a financial product and explaining its features and how it can help meet the needs of investors is no longer an educational conversation,” she said.

Factual information about a plan’s investment and rollover options “should be considered education and not advice,” she added.

As for how the plan would impact annuities, McCaskill complained that the proposal “would nearly eliminate access to many annuity products, and create an unlevel playing field for variable and fixed annuities.”

The proposal, she stated, “focuses exclusively on cost” of these products, “which makes it difficult to match an investor with the most appropriate and safest lifetime income option, instead of just the cheapest option.”

McCaskill also noted that the best interest contract exemption (BICE), which requires brokers to have clients as well as potential clients sign an agreement before rendering advice, is too onerous. Indeed, Washington Analysis says that one area DOL will provide “greater flexibility” around is BICE, but it won’t be eliminated altogether.

Passing legislation to block a DOL rulemaking “will almost certainly” involve attaching such a measure to a “must-pass” spending bill at the end of the fiscal year — which is Sept. 30 or later — Washington Analysis notes, or when Congress tackles an expected omnibus appropriations bill.

“While we expect Congress to pass an omnibus budget bill in Q4 that could present an opportunity for Republican DOL language to be attached, we think such a spending bill will need Democratic support in order to pass,” Washington Analysis says. “Such a requirement makes attaching DOL language difficult.”

If Congress fails to pass an omnibus spending bill and instead uses a continuing resolution (CR) to fund the government at current funding levels, “such a measure is unlikely to include controversial policy riders such as DOL language,” Washington Analysis states.

DOL will conduct the series of hearings at its headquarters in Washington from Aug. 10-13 and hear from 25 panels; DOL employees will conduct a question-and-answer session with each panel.