Borzi offers few details but says re-proposal will cover brokers selling IRAs.
The Labor Department will not meet next month's deadline to propose a rule that would raise investment advice standards for retirement assets.
“You're not going to see anything in October, because we're not finished,” Assistant Labor Secretary Phyllis Borzi told the Financial Services Institute Inc.'s Financial Advisor Summit in Washington today. “We're trying very hard to make sure we've crossed all the T's and dotted all the I's. We want to be absolutely sure we've given it our best shot before we publish the regulation.”
The DOL is working to propose a rule that would expand the definition of “fiduciary” under retirement law for anyone advising a customer about a retirement plan. The agency originally floated a regulation in 2010 but withdrew it after fierce resistance from the financial industry, which argued that it would curb compensation for brokers selling individual retirement accounts and potentially drive them out of the market.
Pressure from Capitol Hill is not slowing the DOL, according to Ms. Borzi.
“When we're ready to move, we will,” she told reporters after her appearance. “So the delay is our own internal desire to keep working on it.”
When the DOL has settled on a revised rule, it will send it to the Office of Management Budget, which will take up to 90 days to review the proposal. After the OMB has signed off, the rule will be published in the Federal Register and opened to a public comment.
Ms. Borzi addressed several parts of the rule that have caused controversy with groups such as the FSI, which comprises 35,000 independent broker-dealers and financial advisers. The FSI has expressed worries about the potential impact on brokers selling individual retirement accounts.
Ms. Borzi said that the re-proposal will cover the product.
“There's an even greater need in the IRA marketplace to protect consumers from conflicted advice,” Ms. Borzi said.
She reassured the audience of about 400 that commissions will be protected.
“There is nothing in our proposal — old or new — that's going to outlaw commissions,” Ms. Borzi said.
Joe Russo, chairman and chief executive of Advantage Financial Group, told Ms. Borzi that all financial advisers act in the best interests of their clients. But he worries that proving that they serve in that function — by tracking interactions with clients under the DOL rule — would significantly increase regulatory expenses related to small accounts.
Ms. Borzi said that there are many fiduciary advisers are already helping small clients with retirement assets.
“It does cost money to serve the smaller accounts,” Ms. Borzi said. “They can still make money. It's not as if they're going out of business.”
The goal of the DOL rule is to hold financial advisers accountable for the guidance they give to customers saving for retirement.
“What I'm talking about is making sure the advice you give is primarily, overwhelmingly and unassailably the best plan for the client,” Ms. Borzi said.
