An executive in the retirement savings sector is calling on the industry to present a united front to lawmakers and regulators so it can influence future rules better than it did a recently finalized Labor Department investment advice regulation.
Edmund F. Murphy III, president of Empower Retirement, said Monday that regulators are exerting more influence than ever and firms must work together to ensure they can shape the policies coming out of Washington.
“We can no longer take a back seat to policymakers and regulators — we must work in better collaboration with them,” Mr. Murphy told the audience at a Society of Professional Asset Managers and Record Keepers conference in Washington. “We must not let our critics set the regulatory and legislative agenda to define the issues without active engagement from our industry.”
Financial services interest groups fiercely contested the DOL rule, which would require financial advisers to retirement accounts to act in the best interests of their clients.
They continue to battle the measure through five lawsuits that reiterate their concerns that the rule is too complex and costly for advisers, and will make investment advice significantly more expensive to give and receive.
In an interview on the sidelines of the conference, Mr. Murphy said the industry was not coordinated or assertive enough in telling the DOL what it wanted to see in the rule — or kept out of it.
“I think the industry was way too passive,” Mr. Murphy said. “That process could have been more collaborative in the early part of the process as the rule was being designed and drafted.”
On a panel following Mr. Murphy's speech, a Senate committee aide concurred that different parts of the financial industry took different approaches to lobbying on the DOL fiduciary rule, sending mixed signals to Congress. The aide could not be identified under rules for the presentation.
Looking ahead to the new Congress and administration next year, Empower and SPARK will convene an “industrywide forum with the goal of outlining a comprehensive retirement policy,” Mr. Murphy said.
Among the items likely to be on the agenda are a call to establish automatic individual retirement accounts at the federal level, increase the number of automatic features in defined contribution plans, encourage greater adoption of annuities in retirement plans and allow retirement plan participants to make tax-free withdrawals to cover medical expenses.
“We cannot ask legislators and regulators to work with us if we're not, as an industry, approaching them with a consensus and actionable set of needs,” Mr. Murphy said. “If we don't put forward thoughtful and constructive ideas, if we don't drive the discussions, it will be done for us by others.”
The model for a new retirement policy agenda is the industry's approach to the Pension Protection Act of 2006, which included provisions for auto enrollment in 401(k) plans and auto escalation.
Mr. Murphy said provisions in the pension law were shaped by an industry effort led by Great-West Financial President and CEO Robert Reynolds. Great-West is the parent company of Empower Retirement, the nation's second-largest plan record keeper.
“It really started and was led by the private sector,” Mr. Murphy said. In contrast, the DOL rule “was a government-led effort.”