Plan participants’ access to investment education and advice should not be the price of protecting them from unfair and deceptive practices. The New Democrat Coalition, a group of Democrats in the U.S. House of Representatives, urged Secretary of Labor Thomas Perez to follow that principle in a Jan. 13 letter.
The coalition’s interest in this issue is not new. In 2011, it wrote to then-Secretary of Labor Hilda Solis regarding its concerns about the DOL’s initial proposed definition of a fiduciary. It found that proposal wanting because in its view, it would have “significantly restricted the availability of investment help” to small businesses and low- and middle-income Americans.
The coalition is not alone: In April 2013 the Congressional Black Caucus expressed the same concerns to DOL Assistant Secretary Phyllis Borzi. Members of the caucus were worried that the redefinition would drive commissioned brokers from the IRA market, which they believe would have a disproportionately negative effect on African Americans.
The New Democrat Coalition noted in its letter to Perez that while it was happy that the initial proposal was withdrawn, it remains concerned as work proceeds on a new definition. The coalition remains committed to the proposition that the effort to protect plan participants and sponsors — which it supports — be done in a way that “does not restrict access to critical investment assistance.” It also hopes that the new definition does not pose the risk the original one did of creating problems under the prohibited transaction rules by limiting participants’ access to investment advice.
The coalition also urged Perez to make sure that regulators from the DOL and other agencies coordinate their efforts regarding fiduciary standards “in a way that serves retirement savers effectively.”
The coalition says it is “heartened” by Perez’ comments that he seeks to work with lawmakers on this matter (recently he has been lobbying members of Congress to support it) but still requests a dialogue regarding its ongoing concerns.
John Iekel is a writer/editor for ASPPA and its sister organizations, including NAPA Net.
