A group that generally advocates for large multistate employers has issues with a new fiduciary law in Nevada that it says would have a negative impact on small employers.
In a comment letter to Diana Foley, Securities Administrator, Securities Division at the Nevada Office of the Secretary of the State, the ERISA Industry Committee (ERIC) cautions that S.B. 383 “places a greater burden through more prescriptive requirements on brokers-dealers, investment advisers, and other financial planners that advise on retirement plans,” and says that while states are within their right to provide for greater standards than what the federal government requires, “…Nevada should be hesitant if doing so would lead to more cumbersome and costly administrative processes.”
Senate Bill 383, signed into law by Nevada Gov. Brian Sandoval (R) on June 2, revises the Nevada Securities Act to mandate that any “broker-dealer, sales representative, investment adviser or representative of an investment adviser shall not violate the fiduciary duty toward a client” imposed by another statute, NRS 628A.010, which imposes the “duty of a fiduciary” on all financial planners. Senate Bill 383 also modifies the definition of “financial planner” to remove from the exclusion for broker-dealers and their representatives, and investment advisers and their representatives.
Commenting further on the rule, ERIC cautions that “broadening the state’s fiduciary duty beyond what the DOL’s rule requires, would result in an increase of costs for all involved. It is both an increased burden and cost for the financial planner to take extra steps not required by the DOL’s rule, a cost which could be felt by the retirement plan itself. Further, if the plan decides not to absorb such added costs then the plan participants could be liable for absorbing them (i.e. the very people S.B. 383 is intended to protect).”
ERIC, which represents only large plan sponsors, here notes that some of the organization’s members have operations in the State of Nevada that utilize fewer than 150 full-time or part-time employees.
In its comment letter, ERIC suggests that Nevada:
- model or mirror the language provided for under the DOL’s rule;
- include language in any proposed or finalized rules for S.B. 383 that incorporates the DOL’s rule or automatically updates as the DOL rule is updated and goes into fuller effect;
- take notice of the changing landscape and act cautiously in the regulations it adopts for implementing S.B. 383, as it could be viewed as a model for other states; and
- incorporate any rules that the DOL amends between now and the finalization of Nevada’s rules.