Investment Adviser Association members take complaints about DOL fiduciary rule to Capitol Hill

The organization supports the underlying goals of the DOL rule, but thinks it should be "more appropriately tailored" to investment advisers.
JUN 07, 2017

Members of the Investment Adviser Association took their complaints about the Labor Department fiduciary rule to Capitol Hill on Wednesday. Wes Burnett, president and chief executive of Optifour Integrated Wealth Management, said that the DOL rule, which requires advisers to act in the best interests of their clients in retirement accounts, "confuses" his clients because it only applies to some investments and "it will be duplicating what I already do." As an investment adviser, he is held to a fiduciary standard when providing advice. He intended to tell lawmakers and their aides during IAA's Lobbying Day that the Securities and Exchange Commission should get involved in the issue. "The SEC needs to work with the DOL and come up with a better version," Mr. Burnett said. "Don't water down the standard I'm subject to now." Mr. Burnett was one of about 70 IAA members who participated in the program. In its statement of policy priorities, the organization said it supports the underlying goals of the DOL fiduciary rule, but it should be "more appropriately tailored" to investment advisers who already operate under the Investment Advisers Act of 1940. The DOL rule will go partially into effect on June 9, while the agency continues to reassess the measure under a directive from President Donald J. Trump that could result in its modification or repeal. Changes could be made to the best-interest contract that advisers and brokers sign with clients, including the related disclosures and a provision that allows class-action lawsuits if the agreement is violated. "The next piece of the rule is going to be really critical for [IAA members]," Jeff Brown, senior vice president and head of legislative and regulatory affairs at Charles Schwab & Co. Inc., said before participating in the IAA congressional meetings. "Right now, the disclosure regime is massive. That can be refined. Using the trial bar as an enforcement mechanism is probably a flawed mechanism for enforcing government rules." A bill that includes a provision to kill the DOL rule, the Financial Choice Act, is coming up on Thursday for a House vote. It contributes to an atmosphere that is conducive for the IAA's talks, according to Neil Simon, IAA vice president for government relations. "Financial services is a top of mind issue," Mr. Simon said. "The timing of our Lobbying Day couldn't be better." Earlier this week, the Financial Services Institute sent more than 100 members to meet with lawmakers and staff. On May 24, the National Association of Insurance and Financial Advisors brought more than 700 members to Washington for its congressional conference, which included a day on Capitol Hill. Mr. Burnett wants to leave lawmakers with the idea that less is more when it comes to regulation. "I'm hoping to see a regulatory pause," he said. "I'm hoping in the next three to six months, we won't see anything new. We'll try to improve and clarify what we have on the books."

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