With the election results heralding four more years for EBSA head Phyllis Borzi, the long-pending fiduciary regulations are likely to be the agency’s first order of business, as we reported recently.
Speaking at a CPI Broker Dealer Executive Roundtable, Brad Campbell of Drinker Biddle — who was Borzi’s predecessor — opined that not only are the fiduciary regulations alive and well, but there is a possibility that they could be fast-tracked now that the election has come and gone.
When we last tuned in, the proposed regulations would more broadly define a fiduciary, moving from a five-point test to only two criteria: whether a fee is charged and an understanding that the advice would be considered. According to Campbell, RIAs would be considered ERISA fiduciaries, as would affiliates of an ERISA fiduciary providing otherwise non-fiduciary services. Exemptions might cover sales, platform, valuation and education exceptions.
The elephant in the room is solicitation of IRA rollovers — technically not within the jurisdiction of the DOL. Even advisors who are not affiliated with a plan might be subject to prohibitions that would clearly apply to plan fiduciaries, leaving most participants to fend for themselves. Campbell indicated that it appears that currently, the EBSA prefers to try to eliminate conflicts rather than provide exemptions.
Agencies have unfettered discretion to promulgate rules if the interpretation is reasonable and the proper process is followed. While many opposed to the pending fiduciary regulations hang their hopes on that process, others hope that Congress will step in. Brian Graff, Executive Director and CEO of NAPA and ASPPA, indicated at the Executive Roundtable meeting that these are the only DOL regs that senators and house members even know about.
Stay tuned.
