Borzi Weighs in on Fiduciary Rule, MEPs and Fee Disclosure

In an exclusive interview with Chris Carosa of FiduciaryNews, EBSA Director Phyllis Borzi weighs in on several key topics — including her agency’s commitment to redefining the fiduciary rule to protect investors from what she calls “conflicted advice.” The proposed rule is moving forward, though further delays are expected.

NAPA has expressed concerns about the rule, especially regarding its potential effect on advisors working under a commissioned model for IRA rollovers. This concern was echoed by delegates, members of Congress and Hill staffers at NAPA’s recent DC Fly-in Forum. One staffer commented that if the DOL follows administrative procedure rules, which it seems to be doing, it will take an act of Congress to stop it.

Other topics Borzi addresses in the Q&A include:

Fee Disclosure — Borzi is pleased with the results of the recent disclosure rules but conceded that it will take time for the full effects to be felt and that adjustments will have to be made, such as a uniform format. A draft guide for service providers is under review at the OMB, she says.
MEPs — There is concern that open MEPs leave too much room for fraud and abuse — like the one run by convicted felon Matt Hutcheson, for example.
Enforcement — Borzi notes that along with outreach programs to educate plan sponsors, her agency is committed to enforcement, with $1.2 billion in fines and penalties collected in the last fiscal year.

Borzi states that the need to strengthen the fiduciary rule was a theme she heard over and over when she joined the agency. She believes that the old rules are just not adequate to protect investors who are relying more on advisors for retirement planning today than they did in the past, when DB plans were more popular.

If you had the opportunity to chat with Borzi for five minutes, what would you ask? Use the comment box below.

Add Your Comments


  1. Craig Davis
    Posted September 25, 2013 at 10:40 am | Permalink

    Why does the DOL still have the 2.5 month deadline for ADP/ACP testing? Any corrective distributions are taxable in the year they occur. This seems like an unnecessary stress on the industry.

  2. Richard Schwamb
    Posted September 25, 2013 at 12:38 pm | Permalink

    Everyone seems to be missing the BIG picture on this whole issue. It’s not that Advisors have a problem with being a Fiduciary, but the way Borzi & the DOL are structuring the definition it would be a “Prohibited Transaction” for the Trusted Advisor on the plan to handle the Rollovers. That is just plain SILLY!! So the person who have helped these unsophisticated investors over the years & decades when it comes to the most critical part of their lives (surviving Retirement) we truely throw them to the Wolves. Because it will usually be the wolves in our Industry that would handle the low end or Non – Highly Compensated individuals. That is not just plain Silly – that’s irresponsible, but a consequence that well intended politicians and Miss Borzi will create if this part of the definition is not fixed. If she fixes that piece I don’t think you would have much objection at all.

  3. Kerry Pechter
    Posted September 25, 2013 at 4:07 pm | Permalink

    Isn’t the situation different for different size plans? In a tiny plan, the advisor knows all the doctors or lawyers in the plan, and continuity makes sense. In a big plan, they have a more agnostic rollover system, right? The government is worried that participants will go from the low-cost world of ERISA to… who knows what kind of managed accounts or actively-managed funds or variable annuities. Should a rollover mean a haircut for the participants and a big payday for an advisor? How fiduciary is that?

  4. Alex Assaley
    Posted October 3, 2013 at 9:57 am | Permalink

    I agree with both Richard and Kerry – which is why the DOL’s proposed regulations make no sense. The proposal would make it OK for an unscrupulous broker to facilitate a rollover into an annuity at 5%+ commission and never serve the client again, while the fiduciary advisor would not be able to serve the participant in an appropriate IRA solution that may include a suite of services above and beyond what the participant was receiving in the 401k. As a fiduciary who doesn’t handle rollovers, I still think it makes no sense.

    Finally, I find it comical that Phyllis reference Matthew Hutcheson, clearly a fraud and swindler, but someone that both the DOL and IRS relied upon for years as the “golden saint” of fiduciaries – the lack of oversight and due diligence these agencies performed before having him serve as expert witness is the problem that employers will face regardless of a fiduciary standard – they will just be more confused of the different “fiduciary types” now to go along with it.

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