Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. REGULATION AND LEGISLATION
July 27, 2015 01:00 AM

DOL fiduciary proposal elicits torrent of comments

Need for standard is clear, they say, but rule as written is flawed

Hazel Bradford
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Eric Kayne
    Secretary of Labor Thomas Perez

    Comment letters on the Department of Labor's proposed fiduciary rule poured in July 21, the last day of the comment period.

    The department received 2,254 letters in all, with many groups representing retirement plan investment and service providers warning that while they support a standard that protects clients' best interests, new rules to ensure that in specific situations would be unworkable.

    Others, like the ERISA Industry Committee, which represents large employers on benefits issues in Washington, said in its letter that more changes were needed to avoid increasing regulatory burdens, costs and uncertainty among plan sponsors, plan participants and service providers. ERIC called for the DOL to be clearer about which employees of a plan sponsor can offer investment advice to other employees.

    Also chiming in were members of Congress. In a letter sent to Secretary of Labor Thomas Perez, Rep. Maxine Waters, D-Calif., ranking member of the Financial Services Committee, and Bobby Scott, D-Va., ranking member of the Education and Workforce Committee, along with a dozen other Democratic House members, called for a new standard to address IRA rollover advice and other recent practices.

    The members said they expect the DOL to address “any legitimate concerns” raised, but “we also believe that some of the claims and objections that have been raised are overstated or outright false,” particularly claims that the proposed rule will harm small savers.

    In their own letter to Mr. Perez, Republican members on the House Education and the Workforce Committee asked the DOL to withdraw the proposed rule.

    Citing concerns that it will “cut off vital financial advice” for low- and middle-income families and small business owners, the GOP members said the rule, as proposed, would ban “some of the most basic advice,” such as rolling over assets from 401(k) accounts.

    Hearings on the DOL proposal will be held the week of Aug. 10. The public comment period will reopen for up to 45 days after the hearing transcript is published in the Federal Register.

    In a July 21 letter, BlackRock Inc. executives argued the proposal's “critical flaw” is that it is not tailored to address problem areas such as rollovers of individual retirement accounts, and might not facilitate more retirement savings as intended.

    “We believe that the structure and burdens imposed by the proposal will create a regulatory environment that is inconsistent with our shared goal and will produce the opposite of the intended effect,” wrote Barbara Novick, vice chairwoman, and Patricia Anne Kuhn, managing director in the legal and compliance department at BlackRock. They called for clarifications that would allow for investment alternatives education, a streamlined “best interest contract,” and expanded exceptions for existing market practices. They also called for the Securities and Exchange Commission to be the first agency to produce a uniform standard for retirement and individual investment accounts.

    The Securities Industry and Financial Markets Association's asset management group said in one of eight letters submitted by the group that its members already are fiduciaries when they act as discretionary investment managers or provide investment advice to employee benefit plans subject to ERISA, but the proposal “will restrict asset managers' ability to provide information” and services. Money managers and investors deemed sophisticated “will be burdened by standards designed for retail retirement savers,” and “plan performance may suffer, as asset managers and their offered products become restricted.”

    “We agree with the DOL that more can be done to help Americans save for retirement and that there should be a best interests standard in place,” said Kenneth E. Bentsen, Jr., SIFMA president and CEO, in a statement. He added, however, “we believe DOL is the wrong regulator to be in the lead here and the rule as written completely misses the mark.”

    In its letter, the CFA Institute said that despite concerns raised by some industry participants about potentially limited service to some parts of the retirement investment market, the institute “believes the proposal does a good job of accommodating various business models while still requiring investment service providers to act in their clients' best interest.”

    Mr. Perez defended the proposed rule July 21 during a Senate Health, Education, Labor and Pensions Subcommittee on Employment and Workplace Safety hearing. “The problem in our system is that (the current system) incentivizes complexity ... because complexity generates more fees.”

    For their part, officials at the U.S. Chamber of Congress believe the DOL should switch to negotiated rulemaking to produce a new fiduciary standard.

    “The rule right now is obviously unworkable,” said Alice Joe, managing director of the organization's Center for Capital Markets Competitiveness, during a July 20 news conference.

    Related Articles
    DOL panel presenters debate more disclosure vs. stricter fiduciary rule
    DOL moving forward on fiduciary rule
    Democrats call for more flexibility on fiduciary rule
    Recommended for You
    Standards-of-conduct rules approved along party lines
    Standards-of-conduct rules approved along party lines
    Investors hail SEC guidelines on exchanges
    Investors hail SEC guidelines on exchanges
    SEC passes Reg BI package by 3-1 vote
    SEC passes Reg BI package by 3-1 vote
    Strong Demand Drivers Underpin Private Credit
    Sponsored Content: Strong Demand Drivers Underpin Private Credit

    Reader Poll

    June 6, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Nearing the finish line: Ideas on end-state investing for corporate DB plans
    The Meaning of "Portfolio Intelligence"
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Crossroads: Politics, Inflation, & Bonds
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    June 20, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit