Podcast Center
Video Center
Webcasts
Resource Center
Events
April 25, 2016 at 08:01 PM
Labor Secretary Thomas Perez will be credited with forever changing the nature of retirement advice.
After suffering through six years of slings and arrows from opponents in the Department of Labor’s battle to reshape its original 2010 rule to change the definition of fiduciary under the Employee Retirement Income Security Act, the DOL finally released the rule on April 6. Perez stepped in and reenergized support for the rulemaking three years into its revamp, using his political acumen, labor roots and sharp speaking skills to get the rule to the finish line.
Perez’s stint as the former Labor Secretary for Maryland “stood him in good stead in that he understood how to break a logjam,” said Barbara Roper, director of investor protection for the Consumer Federation of America.
While Obama Administration backing was viewed as a game changer in cementing the final rule’s eventual completion, it was Perez’s personal commitment and willingness to listen to concerns from industry as well as political detractors on Capitol Hill that sealed the deal. “He went on a listening campaign,” Roper said. “That helped him understand the concerns of rule skeptics and to distinguish those concerns from the efforts of rule opponents who were never going to be won over.”
The revamped rule that was finalized in early April “was significantly different from the 2010 proposal in ways that made it easier to sell to skeptical Democrats on the Hill,” Roper added.
Indeed, Perez said at the April 6 event at the Center for American Progress to announce the final rule that DOL “had a very lengthy and deliberate process,” and the final rule proves that DOL “listened and made changes.”
Roper, a staunch supporter of the rule from start to finish, opined that Perez “understood where the compromise lay that would produce a rule that would satisfy supporters and skeptics alike.”
While Perez has stated that the new rule will be able to withstand legal challenges, detractors maintain that the rule, while better in some areas, will still open a Pandora’s box of unintended consequences — mainly depriving low- and moderate-income savers with the advice they need.
Ken Bentsen, chairman and CEO of the Securities Industry and Financial Markets Association, an opponent of DOL’s rule, stated after the final rule’s release that he was most concerned with “the nature by which the government advocated for the rule,” and that the rule premise was based on the notion that “the brokerage industry’s business model ‘rests on bilking’ their clients.”
Supporters of the final rule are bracing for political and legal attacks. “We have to remain vigilant in supporting the rule on the Hill,” said Marilyn Mohrman-Gillis, the CFP Board’s top lobbyist.
