SIFMA plans to step up opposition to DOL fiduciary-duty rule

Wall Street resistance has helped slow down a pending Department of Labor rule to strengthen standards for advisers to retirement plans. With a re-proposal slated for January, the Securities Industry and Financial Markets Association is urging more of its firms to contact Congress to oppose the measure.
JUL 13, 2014
As the clock ticks toward the re-release of a proposed Labor Department regulation that would extend fiduciary responsibility to advisers selling individual retirement accounts, a securities industry trade group is stepping up its lobbying campaign against the regulation. The regulation, which was introduced in 2010 but withdrawn after fierce industry resistance, was slated for re-proposal last May. Instead, the agency delayed it until January. At the annual conference of the Securities Industry and Financial Markets Association Monday, former SIFMA chairman Jim Rosenthal said group members had generated 100,000 emails to Congress over six weeks this year in opposition to the DOL rule. The group also had meetings with 39 lawmakers. But Mr. Rosenthal said the organization has to become more active. He noted that 92% of SIFMA's 537 member firms sat on the sidelines of the DOL opposition effort, fewer than 10% of member firms' 270,000 financial advisers sent emails to Congress and none of the firms' clients participated. “Essentially, we mobilized thousands, when we have the potential to mobilize hundreds of thousands of employees and millions of clients,” Mr. Rosenthal, chief operating officer at Morgan Stanley, said in a speech at the SIFMA conference. He urged SIFMA members to keep up the fight. NOT OVER “It's not over,” he said of the DOL measure. “It's not surprising the proposal is alive and coming back for another round.” SIFMA already is one of the top lobbyists, spending $5.8 million so far in 2014, according to the Center for Responsive Politics. Its message about the DOL rule may resonate more with the Republican-majority Senate that was elected last week than the current Democratic-led Senate, although the rule has produced bipartisan criticism. Under the original DOL proposal, the definition of “fiduciary” would extend to more financial advisers who provide advice to retirement plans, including brokers who sell individual retirement accounts. The agency is promoting the rule as a way to protect investors from advisers with conflicts of interest. In his SIFMA appearance, Mr. Rosenthal asserted that the rule would force IRAs to be held only in managed accounts that charge investors fees based on assets under management. It would curtail their being offered in brokerage accounts that charge investors on a transaction basis for trades. He said such an arrangement would prevent brokers from servicing small accounts. DOL Assistant Secretary Phyllis Borzi, the rule's champion, has stated in many public appearances that the new rule will not prohibit commissions on IRAs and also would include other exemptions that would address other forms of compensation. Labor Secretary Thomas Perez is meeting with business groups in advance of the DOL's January re-proposal. Wall Street is girding itself for the revised rule by continuing to talk to lawmakers, said new SIFMA chairman Bill Johnstone, chairman and chief executive of D.A. Davidson Cos. “We've been quite effective at the congressional level,” Mr. Johnstone said on the sidelines of the SIFMA conference. “We don't think the case has been made [in favor of the DOL rule]. It's costly. It limits investor choice. It has a particularly adverse effect on smaller investors.”

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.