At least one major industry player is taking a more welcoming stance toward working with the Labor Department as it seeks to create a rule that would hold brokers to a fiduciary standard when dealing with retirement plans.
Speaking on Wednesday at a conference for the Securities Industry and Financial Markets Association, an industry trade group that has been a vocal opponent of the DOL's fiduciary efforts, the head of
Bank of America Merrill Lynch, John Thiel, advocated for working more collaboratively with the regulator on a rule.
“Since 2010, we have supported the notion of a consistent and higher standard for every professional that deals with the American investor and those that deal with retirement plans,” he told the roughly 200 industry executives gathered in Chicago for the conference. “As an organization, we have provided input to policymakers in Washington; we believe we were heard and we will have an additional opportunity to comment once the rule is open for comment.”
The view ran contrary to that of many brokerage and insurance trade groups, including SIFMA, the Financial Services Institute Inc.and the Insured Retirement Institute. They have strongly opposed a rule proposal from the DOL out of the concern that it may limit compensation for brokers who sell individual retirement accounts and possibly reduce the availability of advice for middle-income clients.
SIFMA has also argued that the SEC should be responsible for issuing any uniform fiduciary standard, not the DOL.
“The industry has a responsibility not just to respond, but also to lead, even if it means challenging our regulators, on a popular sounding but ultimately counter-productive notion,” SIFMA president Kenneth Bentsen said in his opening remarks at the conference.
A spokeswoman for SIFMA, Katrina Covalli, declined to comment on Mr. Thiel's speech.
Although Mr. Thiel did not reference the Labor Department by name, his comments refer to a rule proposal that will soon be open to comments.
Mr. Thiel's comments took a more flexible tone toward that proposal, implying that he and Merrill Lynch have been working constructively with the DOL on the proposal.
“As an industry we should work in a constructive and collaborative manner that's in the best interest of clients,” he said. “It's obviously the right thing to do.”
It could put pressure on other firms to take a similar approach as Merrill Lynch remains one of the largest firms under SIFMA's umbrella with more than 14,000 advisers and $2 trillion in assets.
“I thought [Mr. Thiel] was dead-on that we as an industry have to come to a conclusion on the fiduciary standard,” said Darryl Metzger, who leads the private-client group at Hilliard Lyons. “His comment is, if it comes from the DOL, they seem to be first and foremost with it and at least it would be clear and we can understand it.”
Asked after his speech why he didn't use the word “fiduciary” specifically, Mr. Thiel said that “best interest” was easier for investors to understand.
"Do I have to [say it]?” he asked rhetorically. "Do you think investors understand what that word means?"
