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Reader Poll: Will the SEC Proposals Influence the DOL?

Last week the SEC unveiled its much-anticipated fiduciary proposals – at a time when we still don’t know what the Labor Department will do in the wake of the 5th Circuit’s decision to vacate its fiduciary rule. But what a difference a week can make.

Sure, it's a big proposal (three of them, actually) – but we started by asking what readers had been able to get through. I’m pleased to say that more than 8 in 10 had read NAPA Net’s coverage of the SEC proposal, with another 62% having read general coverage. After that, things fell off dramatically (more than one response was allowed):

20% - read through at least one of the proposals
19% - skimmed some
13% - planned to get through them this week
7% - read through all three proposals
5% - skimmed all of the proposals
4% - waiting for the final version(s)

Proposal Perspectives

We then asked readers whether they thought the SEC proposals would:

  • 42% - not matter, because these proposals are not close to being the final proposals

  • 40% - help

  • 11% - make no difference at all

  • 7% - hurt

We then asked readers how (or if) they thought the release of the SEC proposals might impact/influence the Labor Department’s next steps with the fiduciary rule. The vast majority saw it as having an impact, with more than half (53%) saying that it increased the likelihood that the DOL would step back and integrate with the SEC. That was (distantly) followed by the 22% who thought it would increase the likelihood that the DOL would step back and let the SEC take the lead. The rest split nearly evenly between:

Yes, more likely to press forward with appeal of 5th Circuit decision.
Yes, more likely to pull back on the parts dealing with IRAs, and focus on ERISA accounts.
I’ve no earthly idea.

‘Wish’ List

But there’s what we think might happen – and what we wish would happen – and this week we also asked readers about the latter. The responses:

52% - The DOL should step back, and integrate its efforts with the SEC.
27% - The DOL should step back, and let the SEC take the lead.
13% - The DOL should pull back on the parts dealing with IRAs, and focus on ERISA accounts.
8% - The DOL should press forward with appeal of 5th Circuit decision.

Reader Comments

We did get a number of reader comments this week – here’s a sampling:

  • I hope the DOL recognizes that the SEC approach is the appropriate way to regulate and abandons their quest to legislate by regulation.

  • We should all look at this from the standpoint of the investor: What’s best for them?

  • Can’t tell if this is good for small RIAs or if this is a Trojan horse. Much like the DOL rule, I’m afraid about the details that haven’t been reported. Now that the BDs have built systems, changed processes, spent time and money, etc., how much of it all will they keep because of the sunk cost and subject their advisors and clients to?

  • DOL’s “go-it-alone” approach was foolish and was essentially a land-grab. The public would have been better served if the DOL had worked with the SEC and issued joint regulations. Think of the millions of dollars spent by financial services companies trying to comply with the DOL rules that should never have been issued in the first place. Heads should roll at the DOL but they won't because there is no accountability in the public sector.

  • As with the DOL proposal... too long. Why can this not be made simple? One page, principles-based, easy to comply with, easy to enforce. finally, conduct should determine fiduciary status, not method of payment.

  • The disclosures are just too long. No one will read them (except plaintiffs’ lawyers). They should be simplified. Just say when the person has to act in the individual’s best interest (and for b-ds, when they don’t). It could be a page.

  • The SEC is really late to the table, but better late than never.

Thanks to everyone who participated in our weekly NAPA Net Reader Poll!