By: Kenneth E. Bentsen, Jr.

 The following op-ed was originally published in The Hill on July 13, 2015.

Much of the discussion around the Department of Labor’s recently proposed retirement regulation focuses on the question of a “best interest standard” for financial advisors providing guidance to IRA holders and employees who participate in 401k plans. But that’s not what the debate is really about.

The financial services industry has long advocated for such a best interest standard when providing personalized investment advice. Congress in the Dodd-Frank Act, with the industry’s support, authorized the Securities and Exchange Commission (SEC) to develop such a standard. And FINRA, the congressional mandated self-regulatory organization that along with the SEC and the states regulates broker-dealers, has increasingly imposed such a standard through its rulemaking, guidance, examinations and arbitration policies.

In fact, the debate is not even about the language the DOL uses to define a best interest standard in its proposal. That in and of itself is something the industry and other regulators agree upon.

Rather, the debate is about the next several hundreds of pages of conditions and prescriptions the DOL proposes in addition to the best interest standard. These provisions both explicitly and implicitly limit the types of investments individuals may choose with their own money.

Further, the DOL seeks to establish new liabilities, on top of existing private rights of action. When combined with the operations and systems requirements, this new jeopardy of liability very likely would incentivize providers to transition many if not most clients from brokerage to fee based managed accounts in order to avoid the DOL’s burdensome new requirements on the brokerage model, which would result in investors effectively having to buy more services than they want or need, and thus at a higher cost.

As we have this debate it’s instructive to look at other jurisdictions where proposals similar to the DOL’s have been tried, most notably the United Kingdom. The UK put in place a rule known as the Retail Distribution Review (RDR) in 2013 that sought to address perceived conflicts related to investment advice by banning commission brokerage accounts for retail investors. While the DOL proposal does not explicitly ban such accounts, its prescriptions could effectively do so.

So what’s been the outcome of the UK RDR? According to a survey commissioned by the UK Financial Conduct Authority (FCA), several advisors stopped providing retail services and many have instituted account minimums, with some requiring approximately $80,000 or more. Recent reports estimate that 11 million investors have been priced out of the market due to decreased willingness of both financial advisors to provide advisory services and consumers to pay increased advisory costs. The FCA chairman, during a 2014 executive session with the UK Parliament Treasury Select Committee, noted that the average cost of advice “weighs heavily” on those investors with less money to invest.

Yet the facts show that, just as we saw in the UK, the DOL’s proposal could well result in fewer Americans having access to the advice they need to save for retirement. The DOL, in its analysis of the 2011 final rule implementing the investment advice provision of the Pension Protection Act, found that financial losses from investing mistakes likely amounted to more than $114 billion in 2010.

However, the DOL’s new, complicated regulation – while well-intended – does not support this well-established reality; it risks reducing many investors’ access to meaningful guidance and education while unnecessarily raising their costs. This is particularly troublesome for low to middle-income savers who rely heavily on the brokerage model. Currently, 98 percent of IRA investors with less than $25,000 are in brokerage relationships.

The bottom line is that we all agree that we should establish a best interests standard, and in many ways we’re already headed there. The standard should apply across the entire retail market, not just the tax deferred retirement market. The DOL proposal’s prescriptions and conditions – separate and apart from the best interest standard – create a myriad of new requirements and systems that will make the process of helping American savers prepare for retirement far too complex to implement without causing undue harm. In the end, the very same investors the DOL seeks to protect could inadvertently be harmed with limited choices, less access to retirement advice, and higher costs.

Bentsen is the president and CEO of the Securities Industry and Financial Markets Association (SIFMA). He served in the House from 1995–2003.

Learn more at SIFMA’s DOL Fiduciary Resource Center.