Labor Secretary Thomas Perez defended his agency's proposed new rule to address conflicts of interest in retirement investment advice at a House hearing Wednesday.
“We believe that we have proposed a reasonable, middle-ground approach that is responsive to our extensive outreach and feedback,” Mr. Perez said during a hearing of the House Education and the Workforce Subcommittee on Health, Employment, Labor and Pensions. The rule is needed, he said, because “the system is misaligned.”
Mr. Perez said the basic principle of the proposal — that investment advisers should act in their clients' best interest — “is a tenet that has increasing support.”
But Kent Mason, partner in law firm Davis & Harman who consults with plan sponsors, their trade associations and financial institutions on the proposed rule, said “there is a growing consensus among the industry that the 2015 proposal is actually much worse and much less workable. … The industry is absolutely fine with the 'best interest' standard” but wary of how a new standard would address prohibited transactions, including brokerage models, Mr. Mason said.
The Department of Labor will hold a hearing on the proposal the week of Aug. 10 and reopen the public comment period for up to 45 days after the hearing transcript is published in the Federal Register.