While the industry has spent a lot of time, energy, effort – and money – getting ready for the Labor Department’s fiduciary regulation, what will we make of it five years from now? Four of the nation’s leading ERISA legal experts weigh in.
Though we’ve had the final regulation to study for some time now, advisors, consultants, home office staff and the legal community are still scrutinizing the text to evaluate its impact on business practices, compliance requirements and revenue structures.
Here’s the take of these ERISA experts: former Assistant Secretary of Labor Brad Campbell (now with Drinker Biddle & Reath), Groom Law’s David Levine, Marcia Wagner of the Wagner Law Group, and Fred Reish of Drinker Biddle & Reath.
Five years from now, what do you think we’ll think of the fiduciary regulation?
Levine: The fiduciary regulation imposed new process and compliance requirements that were burdensome but have been heavily systematized. It will likely be viewed as reshaping who plays what role in the retirement services industry. However, depending on the DOL’s additional interpretations, we may also be looking at a more complex enforcement and litigation landscape five years out from the regulation.
Campbell: I think we will look back and shake our heads that we spent so much time and treasure on comprehensive change that provided no real benefit in relation to its costs. The winners will have been the lawyers, and the losers will have been the small plan participants and IRA owners with small account balances.
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Wagner: I believe these regulations are a watershed moment for the industry and will have a much bigger lasting impact than any other major regulation since PPA 2006. They will reshape the entire industry in a more dramatic fashion than 408(b)(2) or 404a-5.
Reish: I believe that the fiduciary regulation will be viewed favorably five years from now. However, in saying that, I am separating the regulation from the exemptions. With regard to the exemptions, I believe that BICE will need to be modified in the future, as the Department of Labor learns about unforeseen difficulties and consequences, as well as deficiencies that should be improved.
Read the rest of this four-part series:
- Part 1: What were you most pleased to find in the final regulation?
- Part 2: What is the aspect of the fiduciary regulation that you find/think that advisors haven’t focused on yet – that you think they should be?
- Part 4: Final words of wisdom – and caution.