Public hearings on an updated fiduciary standard proposed by the Department of Labor got underway Monday with witnesses presenting a range of positions.
Assistant Secretary of Labor Phyllis Borzi, who heads the Employee Benefits Security Administration, launched the four days of hearings by saying an updated fiduciary standard was necessary because “the status quo doesn't adequately protect today's retirement investors. This is not a case of bad people doing bad things; it's about good people operating within a structurally flawed system.”
Charles Van Vleet, chief investment officer of Textron Inc., testified on behalf of the Committee on Investment of Employee Benefit Assets, which advocates for extending a fiduciary standard to individual retirement accounts. “We give great care and concern to (CIEBA members' plan participants); we feel that same care and concern should be extended in the rollover environment. We believe that participants who have had the fiduciary standard within the plan should maintain the same standards outside the plan,” Mr. Van Vleet said.
David Certner, AARP legislative policy counsel, testified that the rule is urgently needed.
“The potential negative impact of conflicted advice is enormous, costing retirement investors billions of dollars each year,” he said.
Several financial services trade groups' officials raised concerns that complicated new rules would cut off retirement advice to smaller investors or increase costs, but two witnesses representing a coalition of certified financial planners said the proposed disclosure of potential conflicts of interest by investment advisers would be workable, with some refinements.