SIFMA’s Views on the Department of Labor’s Fiduciary Proposal

We offer the following as a clarification and reiteration of SIFMA’s views on the Department of Labor’s fiduciary proposal, offered in response to recent mischaracterizations of our views.

The DOL’s proposal would convert virtually anyone who speaks to a retirement investor into a “fiduciary,” subject to a costly and complicated regulatory regime that was never intended to apply so broadly.  Everyday Americans trying to save for retirement would lose their ability to decide whether to work with, and pay for, a fiduciary investment adviser.  Instead, if they wanted to continue to be able to talk to their brokers, they would have no choice but to move to higher cost fee-based advisory accounts.  The smallest investors, who could not afford higher fees, would be left on their own.

In the Dodd-Frank Act, Congress directed the SEC to review the standard of conduct applicable to all retail investors.  Consistent with this mandate, the SEC has undertaken a careful review that included a comprehensive “request for information.”  We support the SEC’s efforts, and we do not understand why the DOL wants to jump the gun by proposing its rule before the SEC has a chance to complete its work.

Finally, while some have suggested that the DOL’s proposal is a necessary consumer protection, it ignores the extensive regulation and oversight to which broker-dealers are subject by the SEC, FINRA, and state securities regulators, including rigorous registration, licensing, testing and continuing education requirements, and mandated disclosures relating to brokers’ backgrounds and conduct.

Lisa Bleier

Managing Director

SIFMA