The ERISA requires fiduciaries of pension plans to perform certain due diligence on service providers and plan investments. This helps ensure that the fiduciary is acting in the best interest of the plan's participants. In 2010, the DOL proposed a change to the definition of fiduciary under ERISA that would have expanded the scope of those who become fiduciaries, which will capture more of the current services of 401(k) and IRA providers. This proposal would have forced investors from commission-based accounts to fee-based advisory accounts that could ultimately lead to a number of negative consequences for individual investors, including limiting investor choice, limiting investor access to education regarding retirement accounts, and increased costs for saving.
After significant objections were raised by SIFMA and numerous other groups, as well as Members of Congress from both parties, the DOL withdrew its initial proposal and stated it would conduct further economic analysis. The proposal would affect millions of IRA holders and plan participants with assets expect to reach $7.3 trillion by 2016. In February 2015, President Obama announced that the DOL should move forward with its proposed rulemaking. On April 14, 2015, the DOL announced a re-proposal of the rule, which is now followed by a period for public comment. In May, the DOL granted a 15 day extension to the original 75 day comment period, resulting in a total of 90 days for public comment. Public hearings are expected to be held from August 10-13, 2015.
SIFMA Fiduciary Standard Resource Center
After a careful review, SIFMA submitted comments to the Department of Labor (DOL) in response to its proposed retirement regulation, stressing concerns that the proposed rule will harm investors by limiting access to financial guidance, reducing choice and ultimately raising the cost of saving for retirement.
SIFMA agrees with the DOL that more can be done to help Americans save for retirement and that there should be a best interests standard in place. However, the rule as written completely misses the mark. SIFMA’s comments reflect our ongoing concerns that the DOL’s proposal would cause harm – particularly to low and middle-income retirement savers – by limiting investors’ access to choice and guidance, while raising the cost of saving.
SIFMA has proposed a Best Interests Standard for Broker-Dealers, which, if adopted, would establish a best interests standard for broker-dealers serving retail clients. This proposal follows the industry’s long established support for such a standard.
Regulators must also consider the fact that the brokerage industry is highly regulated by the U.S. Securities and Exchange Commission (SEC), the Financial Regulatory Authority (FINRA), and state regulators, including with respect to retirement accounts, and in particular, recent guidance by FINRA with respect to rollovers.
SIFMA Comment Letters and Studies
Best Interests Standard for Broker-Dealers