Speaking remotely to the annual conference of the Investment Management Consultants Association in Seattle, the EBSA’s Phyllis Borzi hinted that the DOL’s proposed rules redefining a fiduciary could include exemptions for different types of business practices — which many assume to be the commission model. Borzi stated, “We have to be able to make a finding that allowing certain kinds of transactions and forms of compensation that would otherwise be prohibited because they have the potential for being conflicted for being self-dealing, we have to be able to make a finding that they’re in the best interest of participants and beneficiaries …”
The exemptions, if there are any, will come with disclosure and transparency. With the world changing and consumers in more need of advice, according to Borzi, there needs to be new rules. Many, however, are concerned that the DOL’s new rules will conflict with the new rules expected from the SEC. Borzi seemed to confirm this, stating that the two worlds are different and that ERISA, which her department oversees, prohibits conflicts of interest.
Perhaps pushback from different groups like the Congressional Black Caucus are causing Borzi to soften her original position.
