Perez to lawmakers: I'll walk you through changes to DOL fiduciary rule

Labor Secretary says its rule raising advice standards on retirement accounts is coming soon, and he will detail what was altered from the original proposal

Mar 16, 2016 @ 1:40 pm

By Mark Schoeff Jr.

Labor Secretary Thomas Perez
+ Zoom
Labor Secretary Thomas Perez

Labor Secretary Thomas Perez told lawmakers Wednesday the release of a final rule that would raise investment advice standards for retirement accounts was imminent.

“We hope to bring it to conclusion … sometime in the near future,” Mr. Perez said in an appearance before the House Education and Workforce Committee.

The controversial regulation was sent in late January to the Office of Management and Budget, where it is undergoing a review. Experts say the final rule is likely to be made public this month or in April.

Designed to reduce conflicts of interest for financial advisers working with 401(k) and individual retirement accounts, it has generated strong opposition from Republican lawmakers and significant worry on the Democratic side of the aisle.

Supporters say the rule would eliminate incentives that encourage advisers to put clients in high-fee products that erode their savings. Critics call the rule complex and costly and say it will make advice too expensive for savers with modest assets.

Mr. Perez assured lawmakers the agency has reviewed more than 300,000 comments about the rule, which was introduced last April, and addressed concerns.

He offered to sit down with one of the rule's leading opponents, Rep. Phil Roe, R-Tenn., and walk him through modifications to the rule.

“I look forward to debriefing you and explaining to you: 'Here was the proposed rule. Here are the comments we got. Here are the changes we made,” Mr. Perez told Mr. Roe, a member of the committee. “I commit to you we will do that with you and anyone else who has an interest.”

But Mr. Perez also pushed back against legislation, such as a bill Mr. Roe wrote, that would halt the DOL rule and replace it with a best-interests advice standard that differs from the DOL regulation's approach.

“Meaning no disrespect to Congressman Roe … I actually think these bills move the status quo backward in material respects,” Mr. Perez said. “We need to move forward.”

Mr. Perez promised Rep. Mike Bishop, R-Mich., that the agency is taking into account misgivings about how the rule would impact variable annuities, which often are sold with high commissions.

“It's an issue that we've heard about and that we're working on,” Mr. Perez said.

The hearing covered a range of items on the DOL agenda, and the fire that Mr. Perez took on the fiduciary rule was lighter than he has received in previous congressional testimony. But it was still clear Republicans want to stop that rule.

“Mr. Secretary, I strongly encourage you to take a step back and build bipartisan consensus in these and other important areas,” said Chairman John Kline, R-Minn. “The department's my-way-or-the-highway approach will not deliver the lasting, positive change working families and job creators need to move the country forward.”

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Consuelo Mack WealthTrack

Why inflation and interest rates could remain low for a very long time

Stephen Smith, co-lead portfolio manager of global fixed income at Brandywine Global, and John Bellows, portfolio manager and research analyst at Western Asset Management, discuss what the outlook for monetary policy means for investors.

Video Spotlight

Are Your Clients Prepared For Market Downturns?

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

Jerry Schlichter's fee lawsuits have left an indelible mark on the 401(k) industry

After a decade of litigation, fees are lower and retirement plans are more transparent. But have the lawsuits gone too far?

10 best financial adviser jokes

How many financial advisers does it take to screw in a lightbulb?

With margins crashing, broker-dealers look to merge: report

Increased regulation is straining profit margins among broker-dealers, sending many of them into the arms of their bigger brethren.

Hackers may have profited from SEC breach

The hack of the agency's Edgar filing system occurred in 2016, but the regulator didn't conclude until last month that the cybercriminals may have used their bounty to make illicit trades.

Top 10 financial firms ranked by investor satisfaction

Find out which firm took the top slot for overall investor satisfaction for the second year in a row.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print