In a surprise to some experts, including Drinker Biddle’s Brad Campbell, the DOL has indicated that brokerage windows are on the docket for 2014. According to a report in Investment News, the DOL is expected to issue a request for comments in April as the first stage of a potential rule making project. The DOL is questioning whether participants with access to a brokerage window will make good decisions.
Campbell commented that the rulemaking could be broad and significant. The Drinker Biddle team of Fred Reish and Bruce Ashton prepared a white paper earlier this year on the fiduciary implications of a brokerage window.
The DOL addressed concerns about brokerage windows in 2012, raising more questions than were answered. Notes NAPA CEO/Executive Director Brian Graff, “The last time they addressed brokerage windows it caused an uproar. NAPA will be watching this regulatory process very carefully.”
According to research by Allianz’s Behavioral Finance Center led by UCLA Anderson Professor Shlomo Benartzi, 90% of participants want to delegate investment decisions, making TDFs the solution of choice. Nine percent want to dabble utilizing seven to nine core funds (so-called designated investment alternatives); only 1% want to do it themselves through a brokerage window.
