Comments Flood In on DOL Fiduciary Rule Delay

Looking beyond a potential delay, Financial Engines Chief Investment Officer Christopher Jones urged Labor to maintain “strong protections to ensure that all Americans have access to unconflicted investment advice.”

With more than 92 million individual investors now responsible for managing their own retirement assets, Jones wrote, “there has never been greater demand for high-quality investment advice.”

Financial Engines, he continued, believes the Conflict of Interest Rule “or a similar regulation is workable for investment advisors and beneficial for investors.”

The fiduciary rule “or a similar regulation will further accelerate the trends toward low-cost, technology-based financial services and products, which will, in turn, make unconflicted advice increasingly cost effective for advisors and accessible,” Jones wrote.

Centennial Securities Co. argued, however, in its comment letter that “we need a delay to ensure our clients understand and are prepared for the changes they will experience as a result of the rule.”

The firm said that it has “spent significant time revising how our business runs, changing our policies and procedures necessary to make the enormous shift required by the new rules, drafting client correspondence and explanations of revised product offerings necessitated by the rule, and creating compliance and surveillance programs, amongst a host of other adjustments.”

Because of “uncertainty” regarding the fiduicary rule, Centennial continued, and President Donald Trump’s Feb. 3 executive order directing Labor to undertake an assessment of its fiduciary rule, and if it deems appropriate, a proposal to revise the rulemaking, “we have not communicated to clients the ways in which the rule will affect the products and services available to them. We strongly believe that clients will be bewildered, confused and uncertain if changes are announced that then need to be revisited in light of the president’s memorandum. We urge you not to disrupt the retirement market in this manner.”

The rule, Centennial said, “should not be applicable until the questions raised by the president are addressed and the new secretary of Labor determines whether rescission or revisions are required or appropriate.”

Charles Mann with Professional Financial Advisors Inc. in San Juan Capistrano, California, opined in his comment letter to Labor that he believes the fiduciary rules “are more harmful than good,” and that he’s “glad” to see “another period of review.”

While “all for reducing conflict of interest,” Mann said he believes the fiduciary rule “would cause more potential litigation in an industry that has too many unscrupulous attorneys that are willing to litigate for no valid reason on the hope of corporations paying them off to get rid of the lawsuit.”

Furthermore, the rules “would also limit competition to qualified plans,” Mann argued. “Many service providers are talking about no longer servicing the industry. We will be left with fewer companies that may very well be poor providers or worse yet, have brokers that will always have some conflict of interest.”

— Check out SEC to Probe Advisor, BD Fiduciary Compliance With ReTIRE Initiative on ThinkAdvisor.