A new fiduciary rule proposal expected shortly from the Department of Labor could have negative unintended consequences, said benefits policy experts at a U.S. Chamber of Commerce forum Friday.
Now officially called the “conflict of interest rule for investment advice,” the proposal will go to the Office of Management and Budget for regulatory review before it is released publicly for comment.
Groups representing investment service providers are concerned that the rule will broaden the scope of the existing fiduciary definition of investment advice and then rely on prohibited transaction exemptions to redefine how and whether the new rule applies.
A broader interpretation of the fiduciary standard “seems to be a lack of understanding,” said Randel Johnson, senior vice president for labor, immigration and employee benefits for the chamber. DOL officials “tend to use a bazooka to kill a mouse.”
But Drexel University law professor Norman Stein said that conflicted interests among retirement savings advisers “is a problem that's been ignored too long.”