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Borzi Declines to Reveal Release of Fiduciary Definition Rule

By Mike Bushnell

While calling it her office’s “highest priority” and saying it was near completion, Assistant U.S. Secretary of Labor Phyllis Borzi declined to say on Tuesday exactly when her agency will submit a long-awaited proposal for revising the definition of fiduciary, a rule that could restrict the kinds of advice plan advisors can give to their clients.

When asked directly about a timeframe for when the DOL will submit the proposal to the Office of Management and Budget for review, Borzi refused to commit to a specific time frame. “People are always asking me when we’re going to see it,” Borzi said of the regulatory proposal. “The answer is that when it’s ready, it will be proposed.”

After previously suggesting that the regulations would be sent to OMB for a 90-day review period sometime in October, Borzi said the department-wide backlog caused by the government shutdown had made that date infeasible. She added that it was “entirely possible” that the regulations would be completed before the end of 2013.

Industry representatives have opposed the regulations, saying they will prevent advisors from helping clients make sound retirement plan choices. Borzi defended the concept of disclosure, saying that forcing advisors to disclose any fees they may receive from plans that they steer their clients to serves the best interest of small business owners and their employees.

“There’s a false assumption that the advice that is part of [an advisor’s] sales and marketing approach is free,” Borzi said. “The people who give advice in a small-saver, small-employer market are not providing that advice for free. People are paying for that advice, oftentimes in the form of higher-fee products and lower returns.”

Participating in a panel discussion at ASPPA’s Annual Conference on Tuesday, Borzi said that any proposal will be subject to the same vigorous review process as the proposal from three years ago. An in-depth report on the session from Employee Benefit News is here.

Mike Bushnell is ASPPA's web content manager.

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