Sent letter to department seeking sit-down with research director; information due by Jan. 15
Financial industry groups say they can't fulfill a Labor Department request for information about their members' individual retirement account business until they better understand what kind of material the agency is seeking.
.In a letter released today, executives from seven organizations — the Financial Services Roundtable, the Securities Industry and Financial Markets Association, the Financial Services Institute Inc., the American Council of Life Insurers, the Insured Retirement Institute and the American Bankers Association — asked to meet with Joseph Piacentini, director of the DOL's Office of Policy and Research Director.
In a Dec. 15 letter, Mr. Piacentini explained that the information will be used by the agency to determine the impact a fiduciary duty regulation would have on the advice industry. Specifically, the DOL wants to know the rate of return, dividend payments and gains for each account, its investment strategy, compensation arrangement, recommendations that advisers made about the accounts and the account holders' risk appetite and financial literacy.
“We would like to meet with you to discussion clarifying and perhaps refining the requested information,” the financial groups wrote in their letter. “Through an expanded dialogue on these issues, we can then fully understand the information and data needs of the department and, in turn, can then reach out to our respective members to determine what information the industry is able to provide.”
Assistant Labor Secretary Phyllis Borzi promised to repropose the fiduciary duty rule by early this year after she withdrew it in September. The yanking of the proposal followed a barrage of criticism from the financial industry and members of both parties in Congress, who said it was too expansive. The rule was originally proposed in October 2010.
That schedule has been delayed by the cost-benefit analysis. The agency now says that it will issue a new rule by the summer.
Even collecting the data for the economic study looks as if it will be slow going. But the agency vows to press ahead.
“We will continue to make every effort to engage with the industry on this important initiative,” said a Labor Department spokesman. “But we are committed to seeing this project through to its completion, given the extensive benefits it will provide to the millions of retirement plan sponsors and participants nationwide, and we are rapidly working toward that objective.”
The Labor Department said that it will use the IRA market information to develop “an expanded regulatory impact analysis” of a rule that would widen the scope of the definition of “fiduciary” for investment advisers to retirement plans. Mr. Piacentini asked the industry groups to provide the IRA background by Jan. 15.
Some of the groups complained that Mr. Piacentini's letter arrived during the holidays when many of their staff members were out of the office. In a statement late last week, Ms. Borzi acknowledged that “some of the information may not be readily available within the time frame.”
Robert Holcomb, executive director of legislative and regulatory affairs at J.P. Morgan Retirement Plan Services, said that the industry is not trying to throw sand into the gears of the regulatory process.
“We would prefer an opportunity to sit down with the DOL and understand the nature and context of their request,” he said. “It's not about stalling. It's not about slowing things down.”
Democratic and Republican opponents of the original rule said it lacked sufficient cost-benefit analysis. One fiduciary advocate praised the Labor Department for political savvy in responding to that criticism.
“I give DOL credit for moving forward and not being intimidated,” said Barbara Roper, director of investor protection at the Consumer Federation of America. “I'd like to clone them and put them in some other agencies. They seem to have a spine.”
