Adviser coalition calls on Congress to reject attempts to stop DOL fiduciary rule

Rep. Peter Roskam and colleagues' 'legislative principles' for retirement advisers refer only to disclosing conflicts, not mitigating them, FPC says

Nov 17, 2015 @ 2:14 pm

By Mark Schoeff Jr.

Groups representing investment advisers are urging Congress to reject legislative attempts to stop a pending Labor Department rule that would raise advice standards for retirement accounts.

In a letter to the House and Senate on Monday, the Financial Planning Coalition called on lawmakers to oppose a so-called rider to an upcoming appropriations bill that would prevent the DOL from implementing the rule. It also asked legislators to shun a potential measure that would replace the DOL rule with another approach.

“We urge you to reject any legislative proposal related to the DOL rulemaking — whether standalone legislation or appropriations 'riders' on the omnibus funding bill — including any legislation based on a 'declaration of principles' that are currently circulating in Congress,” the FPC letter states. “Congressional action is unnecessary and would derail, not advance, a final rule to require retirement advisers to serve their clients' best interests.”

The coalition is comprised of the Certified Financial Planner Board of Standards Inc., the Financial Planning Association and the National Association of Personal Financial Advisors.

One of the lawmakers writing a bill, not yet introduced, to replace the DOL rule said it is arising from bipartisan concern about the fiduciary rule, which was introduced in April and will likely be finalized early next year. The financial industry argues that it would significantly increase liability risk and regulatory costs for brokers and make them less likely to work with clients with modest assets.

Rep. Peter Roskam, R-Ill., touted the “legislative principles” that would form the foundation of the bill. They include requiring a best-interests standard for brokers and “clear and simple” disclosures.

“It's basically apple pie, motherhood and the flag — all good stuff,” Mr. Roskam told an audience of small-business owners at an event Tuesday at the U.S. Chamber of Commerce in Washington. “We think we can come up with something that will raise the standard for the industry — a best-interests standard, something along those lines — and that would still maintain the ability to get the advice that people need.”

Last week, the DOL dismissed the legislative effort, saying the bill would not influence its rulemaking.

In its letter to Congress, the FPC said Mr. Roskam's bill “would weaken, not strengthen the fiduciary standard” under federal retirement law.

“These principles refer only to disclosure of conflicts of interest, but are completely silent on a fundamental component of the fiduciary standard — an obligation to mitigate compensation practices and incentives that give rise to conflicts of interest,” the letter states.

Even if a bill is introduced and gains support in the House and Senate, it would be vetoed by President Barack Obama, who has come out strongly in favor of the DOL rule. He said protecting retirement savings from conflicted advice is a pillar of his “middle-class economics” plan.

Mr. Roskam is “cautiously optimistic” about a bill because “there is an appetite” among lawmakers to stop the DOL rule. He is less hopeful about an appropriations rider.

“You're probably not going to get support on a bipartisan basis on that,” he said.


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