Still hoping that the latest iteration of the fiduciary rule proposal would preserve a broad seller’s exemption for the small retirement plan market or allow retirement plan advisors to continue to offer rollover advice to participants?
Better think again, based on a recently leaked White House memo that purports to lay out the “evidence” that “perverse incentives” in the current regulatory environment governing retirement plan professionals “cost savers billions of dollars a year.”
The memo, written by two key members of President Obama’s Council of Economic Advisors, including the former chief economist of the Department of Labor, also concludes that “consumer protections for investment advice in the retail and small plan markets are inadequate.” Echoing the sentiments of a recent advocacy campaign by several union and consumer protection groups, the memo squarely blames rollover advice and the active management of retirement assets as the primary source of these costs to investors, and lays the groundwork for what looks to be an aggressive campaign to push a fiduciary proposal that has already seen two previous versions, one of which was pulled back by the DOL following harsh bipartisan criticism.
The retirement plan advisor and investment provider community must be prepared to fight back against this effort to implement the so-called ‘conflict of interest rule on retirement savings.’
With the mid-term elections past and the 2016 campaigns already underway, the Obama administration seems determined to proceed with the proposal. At stake is nothing less than the professional retirement plan advice that millions of lower- and middle-income savers rely upon as they make important decisions about what to do with their retirement money. This proposal would, as a practical matter, separate many retirement savers from their advisor of choice, leaving them more vulnerable to unscrupulous actors that couldn’t care less about the interests of savers and potentially undermining years of planning and preparation.
The retirement plan advisor and retirement plan provider community, and anyone who cares about the retirement security of Americans, should immediately begin educating their client base, both plan sponsors and plan participants, about the implications of the rule.
Andrew Remo is the Congressional Affairs Manager for NAPA and ASPPA.
