ICYMI: Ken Bentsen Discusses DOL Proposal Flaws on BloombergTV
- Kenneth E. Bentsen, Jr.
Kenneth E. Bentsen, Jr., president and CEO of SIFMA, joined BloombergTV’s Market Makers to discuss SIFMA’s comments on the Department of Labor’s proposed retirement regulation. The following are key excerpts from the interview, “Why ‘Best Interest’ Standard May Not Be the Best for All” and “”Why SIFMA Opposes Labor Dept. ‘Best Interest’ Rule.”
Yesterday, 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. I joined Stephanie Ruhle and Erik Schatzker on BloombergTV to discuss three key points:
- The rule will unintentionally raise the cost of retirement advice for low- and middle-income Americans.
- Retirement account holders will lose access to financial advice.
- The DOL is the wrong regulator to be the lead author of this regulation.
The Industry Has Long Supported A Best Interest Standard But The DOL Is Not The Right Agency to Author It. “Well in fact we’ve done so. We’ve done so for the past five, six years. We’ve written to Congress, we’ve written to the SEC, we’ve written to FINRA, and we’ve told the Labor Department the SEC is the primary agency that should be writing this. We wrote a standard of how it would work. We absolutely think there should be a uniform standard of care for providing personalized investment advice for all retail accounts, not just one sector.” (Ken Bentsen, “Why SIFMA Opposes Labor Dept. ‘Best Interest’ Rule,” Bloomberg Business, 7/20/15)
If Enacted, The DOL’s Rule Will Limit The Affordability And Access To Reliable Financial Advice For Low-Middle Income Americans. “The net effect is that this proposal, if enacted, would limit the ability of Americans to continue to receive personalized investment guidance for retirement plan accounts, which would result in a less secure retirement for so many Americans already struggling to save and invest for their financial futures.” (Executive Summary, “Comments To The DOL On Its Fiduciary Rule Proposal,” SIFMA, 7/20/15)
A Study On The DOL Proposal By NERA Found That Over 40% Of Retirement Holders Would Lose Access To Financial Advice If The Proposal Were Implemented. “If we were to take at face value the DOL’s methodology in the 2011 cost-benefit analysis discussed above, the new fiduciary standard would cause a loss of access to professional advice for 40.49% of retirement account holders. This would result in an aggregate cost of $114 billion x 40.49% or about $46 billion per year. This is based on a conservative estimate of the minimum balance, at only $25,000. Even at this level, the aggregate cost-by blindly applying the DOL’s own methodology-would be on par with the most extreme range of the DOL’s own estimates of the ‘cost of conflicted advice.’” (NERA, “Comment on the Department of Labor Proposal and Regulatory Impact Analysis,” SIFMA, 7/20/15)
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Kenneth E. Bentsen, Jr.
President and CEO
SIFMA