A coalition of financial services and business trade groups on Nov. 8 sent a letter to the Department of Labor seeking additional time to respond to the agency's new rule proposal that would amend the definition of the term "fiduciary" and require rollover advice to be in the best interest of the saver.
The department on Oct. 31 unveiled the Retirement Security Rule proposal and several prohibited transaction amendments that quickly received stiff pushback from industry groups.
Eighteen groups sent a letter to Lisa M. Gomez, assistant secretary for employee benefits security, asking for an extension of the proposal's 60-day comment period, which ends Jan. 2.
"The proposed rule makes significant and unanticipated changes to the current regulatory framework that will require significantly more time for meaningful analysis and comment, and to understand how this proposal would impact access and choice for retirement savers," said the groups, which include the American Benefits Council, the American Council of Life Insurers, the Insured Retirement Institute, the Investment Company Institute, the Securities Industry and Financial Markets Association and the U.S. Chamber of Commerce.
"DOL has had nearly three years to publish a proposed rule, but has only granted 39 workdays for interested parties to review and comment," the groups added. "An extension would benefit not only the commenters, but DOL itself. DOL should use comments as a resource, but providing too short of a comment period limits the possible benefits."
The department's proposal calls for changing its fiduciary definition by removing three prongs in the five-part test used to determine when a financial professional is considered an investment advice fiduciary under ERISA. The three prongs at issue require that the person providing the advice does so on a regular basis; the advice is pursuant to a mutual understanding; and that the advice will serve as a primary basis for decision-making.
The five-part test, which was established in 1975, too often works to "defeat legitimate retirement investor expectations of impartial advice and allow(s) some advice relationships to occur where there is no best interest standard," the department said in the proposal's preamble.
Instead, the department proposes that a person should be an investment advice fiduciary under the Employee Retirement Income Security Act if they provide investment advice or make an investment recommendation to a retirement investor, like to a plan participant or the plan itself; the advice or recommendation is provided "for a fee or other compensation, direct or indirect;" and if the recommendation is made in at least one of several contexts.
The changes would lead one-time advice, such as rollovers to individual retirement accounts or annuity purchases, to fall under the fiduciary definition if the other parts of the test are met.
The groups would like the department to grant at least a 60-day extension of the comment period, schedule a public hearing after the initial comment period closes, and then open another additional 30-day comment period.
"Considering that DOL has spent almost three years crafting the proposed rule, it strikes us that affording all interested stakeholders sufficient time to provide meaningful feedback would be in DOL's interest," the groups wrote.
A Labor Department spokesperson could not immediately be reached for comment.
Also signing he letter were the Alternative & Direct Investment Securities Association; the American Bankers Association; the Committee of Annuity Insurers; the Financial Services Institute; Finseca; the Indexed Annuity Leadership Council; the Institute for Portfolio Alternatives; the National Association for Fixed Annuities; the National Association of Insurance and Financial Advisors; the SPARK Institute; The ERISA Industry Committee; and The ESOP Association.
