Pension trade group believes DOL fiduciary rule is all but inevitable

American Society of Pension Professionals and Actuaries now plans to shape — not kill — the proposal

Oct 19, 2015 @ 1:19 pm

By Mark Schoeff Jr.

Hundreds of retirement plan advisers are shifting their game plan as they descend on Capitol Hill this week. Instead of urging lawmakers to kill a Labor Department rule that would raise advice standards for 401(k)s and IRAs, they've accepted the rule will become a reality and instead seek to modify it to address their concerns.

“We're not talking about [the DOL rule],” Brian Graff, executive director of the American Society of Pension Professionals and Actuaries, said Sunday at the organization's annual conference at National Harbor, Md. “It's not a productive use of time. We need to improve the rule. We're not trying to block it.”

Mr. Graff also threw cold water on the industry's likely tactic of halting the rule through lawsuits after it is finalized. He said a judge granting an injunction is “a long shot.”

“Even if the industry theoretically has some merits in their arguments — and there certainly are some points I think they do — the likelihood they're going to be able to succeed in the courts swiftly is very remote,” Mr. Graff said. “You're talking about years in the court system, potentially going to the Supreme Court. In the meantime, we've got to comply with these rules.”

The group also is “basically begging [DOL] for a much longer transition period” to implement the rule, Mr. Graff said, because it poses substantial administrative challenges for advisers.

One adjustment ASPPA is seeking to the rule would make “level-to-level” compensation OK. If plan advisers are receiving the same pay for working with a 401(k) plan no matter what investment products are included in it, they can roll over plan participants to an individual retirement account without violating the DOL rule, as long as their pay is also level in the IRA. It would not matter that total fees are steeper in the IRA than the 401(k) due to a higher level of service.

“We have been constructively engaging with the department,” Mr. Graff said. “We're optimistic [DOL] will accommodate us in some way.”

It is inevitable that the rule, which was released in April, will be finalized sometime during the first quarter of next year, according to Mr. Graff. That would put it in place before the Obama administration leaves office.

The rule has strong backing from the White House, which says it is necessary to curb incentives for brokers to put clients into high-fee products that erode retirement savings.

Most of the financial industry is trying to stop the rule, which it says would significantly increase liability risks and regulatory costs for brokers and make it sharply more expensive to give and receive investment advice.

The DOL will likely revise the rule to address concerns raised by Capitol Hill Democrats, Mr. Graff said, but it will not withdraw or re-propose it.

Congressional efforts to stop the rule — either through the appropriations process or by legislation — are not likely to work either because President Barack Obama could veto them.

The approximately 400 ASPPA members who go to Capitol Hill on Tuesday for meetings with lawmakers will instead concentrate on concerns they have about the trend toward state-run retirement plans.

In a panel on Sunday, ASPPA officials expressed worries that a pending DOL guidance regarding state-run retirement plans would give states more lenient rules on automatic IRAs and multiemployer plans than those that govern private-sector providers. The “uneven playing field” would give a competitive advantage to the states, according to the officials.


What do you think?

View comments

Recommended for you

Sponsored financial news

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Upcoming Event

Apr 30


Retirement Income Summit

Join InvestmentNews at the 12th annual Retirement Income Summit - the industry's premier retirement planning conference.Much has changed - and much remains to be learned. Attend and discuss how the future is full of opportunity for ... Learn more

Featured video


Top questions surrounding future of DOL fiduciary rule

Reporter Greg Iacurci and managing editor Christina Nelson discuss the biggest uncertainties springing from the Fifth Circuit Court of Appeals' decision to vacate the regulation.

Latest news & opinion

Stocks plunge, advisers tell clients to hang tight

Though planners encourage calm, some are preparing investors for a correction.

Lightyear Capital's Donald Marron said to be in the hunt for Cetera Financial Group

The veteran brokerage executive, who bought Advisor Group in 2016, owned Cetera once before.

What to watch for next with the DOL fiduciary rule

Much hinges on whether the Labor Department appeals the 5th Circuit decision by April 30.

Finra looks to streamline broker-dealer exams

CEO Robert Cook says three examination teams may be consolidated.

The 401(k) robo-revolution is here

Could human advisers be displaced as digital-advice firms use technology to deliver services to plan sponsors and participants?


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print