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The Fiduciary Proposal — What Are People Saying?

Imagine, if you will, a consumer information label on a milk carton...

Let’s say that label identifies the biological and physiological considerations of cattle, estimates the working life of the average cow (with appropriate graphs and tables to reflect that different breeds experience different results), estimates the amount of energy produced by a glass of milk (as well as the potential for gaining weight from the fat content) and projects the health benefits to you over 1-, 5-, and 10-year periods.

All this so that you, the consumer, can compare the cost of the milk to its positive and negative effects on your well-being.

That’s the analogy presented in a recent update from Ferenczy Benefits Law Center LLP on the disclosures contained in the recent fiduciary proposal from the Department of Labor.

Noting that the proposal expands the definition of a fiduciary, attempts to deal with the potential for conflicts of interest resulting from variable pay structures and addresses many of the criticisms of the DOL’s 2010 proposal, the article details the criticisms of the proposal they are hearing from those in the industry, including:

  • The rules aren’t clear.

  • The amount of disclosure is burdensome (and maybe futile).

  • Liability is unlimited and litigation is encouraged.

  • It doesn’t fix the rollover problem.

  • The Department of Labor has a big stick, but no one to swing it.
  • What do you think? What are you hearing?