Labor Department officials are determined to produce a new standard of fiduciary duty for anyone giving retirement investment advice, once they process concerns raised in thousands of comment letters and four days of hearings on their proposal.
“We will move forward towards issuing a final rule that balances the input we have received,” Labor Secretary Thomas Perez said in an Aug. 7 letter to several members of Congress. “This high level of interest and contribution to the process is indicative of a shift in attitude over the past few years — a recognition of the growing problem of conflicted advice, a desire to create a level playing field, agreement on the simple premise of putting the client's best interest first, and a "get to yes' attitude that will lead to a meaningful and workable rule.”
DOL officials say they are going to great lengths to gather all perspectives, to avoid the pitfalls they encountered in a 2010 attempt to update the fiduciary standard established by the Employee Retirement Income Security Act of 1974. That earlier proposal went back to the drawing board after critics questioned a lack of economic analysis that justified the potential compliance costs on plans sponsors and service providers, among other issues. The current proposal, Mr. Perez said, has “robust economic analysis.”
The proposed new “conflict of interest” rule has drawn comments from all corners of the retirement world covered by ERISA, from plan executives, service providers, insurers, brokers and money managers to retiree groups and the CFA Institute. The 330,000 comments that Mr. Perez said the department has received so far range from visions of lower-cost options for retirement savers, to predictions of fewer options if retirement service providers and money managers are scared away.