Meetings are being held over the next several weeks to discuss the Department of Labor’s proposed fiduciary rule as it moves closer to being finalized, according to WealthManagement.
The plan has been submitted by the DOL to the White House Office of Management and Budget for review, and OMB will meet with supporters and opponents of the rule to hear their views.
The DOL’s rule would update the definition of an investment advice fiduciary under the Employee Retirement Income Security Act. It would impose the fiduciary standard of federal retirement law on most investment advisors, brokers, and insurance agents making recommendations to retirement plans and plan participants and customers in individual retirement accounts. The advisors would be required to adhere to high standards of care and loyalty when making their recommendations and avoid recommendations that favor their financial and other interests at the expense of retirement savers.
Following a 60-day period for public comments and a two-day public hearing in December, the final version of the DOL rule reportedly could be released soon.
Among the organizations who will be expressing their support for the proposal during the meetings are the AARP and the CFP Board. The board has said it will provide meaningful consumer protections and have a significant positive effect on Americans’ retirement security, adding that previous rules do “not prevent advisors from taking advantage of gaps in the regulations to steer their clients into high-cost, substandard investments.”
The AARP is part of a coalition of organizations known as “Save Our Retirement”, who threw their support behind the fiduciary rule last fall. “The release of this rule is a major milestone in the long fight to bring millions of Americans one step closer to a secure, dignified retirement,” the coalition said.
Opponents of the rule will also have their say during the OMB meetings. The plan has drawn strong opposition from the financial industry, which says it would increase advisors’ regulatory costs and legal exposure, making their advice more expensive and hurting investors.
Among those scheduled to express their opposition are Finseca, a trade organization for financial security professionals, and the Insured Retirement Institute.
“Throughout this rulemaking process, DOL refused to acknowledge that its proposal will harm consumers,” IRI President and CEO Wayne Chopus said. “The proposal is functionally equivalent to the now-vacated 2016 rule, and like that rule, it will significantly harm retirement savers, especially lower- and middle-income workers, and further exacerbate the wealth gap for Black and Latino families.”
It remains unclear whether the OMB will call for revisions in the DOL’s plan, which would affect the timetable for the rule to be finalized.
The attorneys at Lewitas Hyman include former senior attorneys at the SEC whose legal experience and industry knowledge make them uniquely qualified to provide counsel on securities regulatory, compliance and enforcement matters. Should your firm be in need of experienced counsel in these areas, please contact us at (888) 655 6002 or through our online contact form.
