Broker-dealers should be “nervous” if they don’t have policies and procedures in place before the Department of Labor fiduciary rule’s first deadline hits next April, Timothy Hauser, one of the chief architects of the rule, said Tuesday at a Financial Industry Regulatory Authority conference in Washington.
Also on Tuesday afternoon, the Senate passed a resolution to overturn the rule.
Nancy Smith, executive vice president and corporate secretary at AARP, said on a conference panel with Hauser that AARP will not only continue to advocate for the fiduciary rule but plans to assemble some members to act as “mystery shoppers” to see if advisors are complying.
The retirement advice “problem is not just a few bad actors,” Smith said. “All financial professionals can face enormous institutional and peer pressure to act in a way that’s not in the client’s best interest.”
AARP, she added, is “also looking forward to fees going down and people having more money in their nest eggs.”
DOL has been fielding “a lot of questions” about what an acceptable set of policies and procedures would entail “if a firm is going to receive variable compensation for certain investments,” as well as what types of compensation structures “can be imposed between the firm and advisor” to satisfy the rule, said Hauser, deputy assistant secretary for program operations at the DOL’s Employee Benefits Security Administration.
“People are still working through the operational issues,” Hauser said. While he reiterated the fact that DOL “wants more back and forth” between industry and DOL before issuing further guidance, he said he expects DOL to issue guidance on policies and procedures that need to be in place. He urged attendees to “come talk” to DOL or send queries to him.