SIFMA Comment Letters Critical of DOL Fiduciary Rule

SIFMA Comment Letters Critical of DOL Fiduciary Rule
Calls for Further Extension, Suggests Path Forward for New Secretary  

Washington, DC, April 17, 2017 – SIFMA today submitted a comment letter to the Department of Labor regarding the Department’s proposed delay and reconsideration of its fiduciary regulation. SIFMA AMG submitted a separate comment letter. In both cases, SIFMA and SIFMA AMG call for the DOL to delay the applicability of the rule beyond June 09, 2017 in order to allow for a proper review of the rule, consistent with the President’s February 3, 2017 memorandum. 

“Notwithstanding the industry’s longstanding and continued support for a best interest standard, SIFMA continues to believe the DOL rule will do investors much more harm than good.  As our letters clearly state, the evidence gathered as firms have moved to implement the rule shows the negative consequences of less choice, greater cost, and increased legal liability,” said Kenneth E. Bentsen, Jr., SIFMA president and CEO.

SIFMA states “The DOL’s rule has proven to be impractical, unrealistic and inconsistent with the new administration’s stated priorities and must be rescinded or revised,” said Lisa J. Bleier, SIFMA Managing Director and Associate General Counsel. “It will adversely affect the ability of millions of Americans to save for retirement, increase the costs of retirement accounts while limiting access to advice and products, and vastly increase the amount of litigation.  While SIFMA has long called for the creation of a uniform best interest standard, the DOL’s rule was never the right approach. We encourage the DOL to further extend the applicability date of this misguided rule until a thorough review can be conducted and until actions can be taken to address identified areas of concern.”

SIFMA AMG states, “The Fiduciary Rule has already resulted in dislocations and disruptions of retirement services that are adversely affecting investors and retirees,” said Laura Martin, SIFMA AMG Managing Director and Associate General Counsel. “Asset managers, as manufacturers of products, have already observed intermediaries beginning to reconfigure costs and cull products and services. SIFMA AMG urges the Department to delay implementation of the Fiduciary Rule beyond the June 9th applicability date and ultimately rescind or revise the Fiduciary Rule after completion of the review mandated by the President.”

The comment letters address the following:    

Limited Access to Services, Products and Retirement Savings Information:
In 2015, total retirement assets in plans and IRAs totally nearly $16 trillion, with more than $7 trillion held in IRAs.  These accounts will be adversely affected by the rule, as retirement investors will lose the products and advisory services that are currently available to them.

Limited access to advice will harm retirement savers seeking to maximize returns. Savers who work with a financial professional have more diverse portfolios and greater savings. Over the course of 30 years, more knowledgeable investors could have retirement funds that are 25% larger. Product choice will also be limited as some financial institutions have announced that they will limit the investment options within certain types and sizes of accounts.  

SIFMA Survey: 
SIFMA’s comment letter included results from  as survey of 25 financial firms representing its broad membership  impacted by the rule and found:

·         More than half the firms are considering moving IRA brokerage clients to call center services only.  Of those limiting services, nearly three quarters would not permit small accounts to have advisory accounts.

·         44% anticipate that more than half of their clients could see a change in services; more than 50% anticipate offering only advisory services to some current IRA brokerage customers.

·         92% of the responding firms stated that their plans could limit or restrict productsfor retirement investors. As many as 11 million households could face fewer choices.

·         Almost three quarters of the responding firms stated that their Rule compliance plans could limit or restrict services available to retirement investors.

·         More than 60% of the responding firms stated that they anticipate that some or all of the costs resulting from the potential increase in litigation and liability insurance may be passed on to clients.

Increased Litigation:
SIFMA urges the Department to recognize the enormous increase in litigation that would result from allowing parties to enter into an arrangement where they have different understandings of the services being provided.  

Problems with the Rule Itself:
SIFMA addresses parts of the rule that are not practical, not capable of ready compliance, not realistic, and not consistent with other financial regulation. SIFMA raises the rule’s clear lack of a seller’s exemption, negative impact on financial literacy, negative impact on rollover conversation, leakage and other concerns.   

Problems with the BIC Exemption:
SIFMA calls for the BIC exemption to be completely overhauled, stating that it goes too far, offering solutions in search of problems, and creating more roadblocks than help for retirement investors.    

The DOL’s Outdated Economic Analysis:
The basis for the DOL’s cost benefit analysis is too old to be reliable and it has been misapplied; it was outdated when used, and in light of huge changes being contemplated in the market, will only lead to flawed results.  It fails to correct errors when the studies it relies on are updated or corrected.  It fails to recognize retirement investor harm from lack of access to advice, reduced investment in equities, lack of guaranteed lifetime income, lack of disability income or long term care insurance.

SIFMA Comment Letter:

SIFMA AMG Comment Letter:


SIFMA is the voice of the U.S. securities industry. We represent the broker-dealers, banks and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the U.S., serving clients with over $18.5 trillion in assets and managing more than $67 trillion in assets for individual and institutional clients including mutual funds and retirement plans. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit

SIFMA AMG members represent U.S. asset management firms whose combined assets under management exceed $30 trillion.  The clients of AMG member firms include, among others, registered investment companies, endowments, state and local government pension funds, private sector Employee Retirement Income Security Act of 1974 (“ERISA”) pension funds, and private funds such as hedge funds and private equity funds.