Retirement service providers and managers are nervously bracing for a whole new world in the coming weeks when the Department of Labor is expected to release a final conflict-of-interest rule. But for some plan sponsors, it can only mean good news.
“We're ready and we think it's the right thing to do,” said Robin Diamonte, chief investment officer at United Technologies Corp., Hartford, Conn., and a past chairwoman of the Committee on Investment of Employee Benefit Assets, Washington, whose members manage $2 trillion of retirement plan assets.
“I don't think it's going to be a big burden on the plan sponsor, but I think it will help us keep our participants. We spend our whole lives trying to help people save for retirement, and there are so many people trying to lure them away, a lot of the time with inaccurate information,” said Ms. Diamonte, who oversees $24 billion in defined benefit assets and $20 billion in defined contribution assets.
The main focus of the new rule, which covers anyone giving retirement investment advice, is the lucrative individual retirement account market and efforts by brokers and other advisers to entice plan participants to roll out of employer plans upon retirement. “A lot of these broker-dealers are going to have to understand what it is to be a fiduciary. You don't have to be right; you just have to be thoughtful. And that's what they should be doing anyway,” she said.
Labor Department officials are pushing to put the finishing touches on the rule while President Barack Obama, who personally stumped for it, remains in office. After thousands of comment letters, four days of public hearings and countless meetings to address concerns, officials say they are trying to make it as workable as possible.
Still, said Timothy Hauser, deputy assistant secretary of labor for program operations, “it's going to be a big adjustment. This is intended to be a significant reform. People giving advice are going to be operating in an environment where their interests are aligned with their clients. All of that is going to take work.”