Killing the clock on fiduciary proposal

Industry reaction seeking more time smacks of foot-dragging, possibly in the hope that the proposal could be delayed, which does not serve investors well
MAY 05, 2015
By  MFXFeeder
The financial industry apparently is a big believer in strength in numbers. Last month, more than a dozen industry groups (16 to be exact) signed a letter to Labor Secretary Thomas Perez seeking a 45-day extension of the 75-day public comment period for the agency's recently released proposal that would raise investment-advice standards for advisers to retirement accounts. The DOL released the rule April 20 and the group, led by the Financial Services Roundtable, sent its letter April 21. It's noteworthy that the industry took just one day to fire off its initial response to the fiduciary rule proposal, but claims it needs at least 120 days to file a comprehensive response. Pressure appears to be coming from the Senate as well. On April 21, several Democratic senators, toeing the industry line, met with Mr. Perez to push the extension issue. Not to downplay the complexity of the rule — because it is indeed complex — but the issue is not a new one and while the proposal was a rewrite of the original 2010 effort, the industry grapples with fiduciary issues all the time. So it's hard to imagine that the financial industry can't get its lawyers to come up with some response in the allotted time. There is no doubt that industry players knew some of what was coming and have some points of view already. From a technical perspective, that 75 days works out to about 300 working hours. That's a lot of time. What's more, Davis & Harman, a law firm that represents many financial firms, was able to craft a quick response, which basically claimed the new proposal was no better than the 2010 version that the Labor Department pulled after stiff resistance from these same financial firms.

NOT A DONE DEAL

And even after the 75 days, it's not a done deal. When the comment period concludes, the DOL will hold a public hearing within 30 days, publish the transcript from that hearing and then take more comments on the proposal. So the knee-jerk reaction seeking more time smacks of foot-dragging, possibly in the hope that the proposal could be delayed until a new administration takes over, something that does not serve investors well. It would appear that Barbara Roper, director of investor protection at the Consumer Federation of America, got it right when she told InvestmentNews reporter Mark Schoeff Jr.: “The industry knows their best chance of killing this rule is to delay it until the clock runs out.”

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.