Slideshow DoL Fiduciary Hearings in 11 Key Quotes

Published
  • August 13 2015, 2:20pm EDT

DoL Fiduciary Hearings in 11 Key Quotes

After four days, nearly 40 hours of testimony and more than 70 speakers, the Labor Department has wrapped up the latest phase in its effort to craft and implement a new fiduciary rule governing retirement advice in America.

An array of speakers, representing plan sponsors, brokerage firms and investor advocates, weighed in on the benefits and flaws of the proposed rule.

Though listening to the sessions was sometimes akin to watching paint dry, fireworks occasionally went off as speakers gave equally grim accounts of abused investors and skyrocketing costs for clients, should the rule be implemented as is.

DoL Fiduciary Hearings in 11 Key Quotes

Some opponents of the Labor Department’s effort have reiterated their support for a fiduciary standard, but one led by the SEC, not the DOL. They claim that the Labor Department’s efforts will create a confusing regulatory regime.

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DoL Fiduciary Hearings in 11 Key Quotes

Another common refrain from opponents is that the rule will diminish client choice, by preventing many firms from providing certain kinds of retirement advice and services because of the rule’s complexity and higher compliance costs.

DoL Fiduciary Hearings in 11 Key Quotes

Investor advocates sometimes presented fierce critiques of the industry in general and brokers in particular.

DoL Fiduciary Hearings in 11 Key Quotes

Executives from asset managers, insurers and brokerage firms made the trip to Washington to inveigh against the DoL’s proposed rule. While some asked the DoL to step back and let the SEC take the lead, others provided pointed suggestions for how to improve the rule’s clarity for firms, advisors and investors.

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DoL Fiduciary Hearings in 11 Key Quotes

The hearings drew a wide array of participants, from AARP to PSCA. While the DOL’s proposal aims to eliminate conflicts, plan sponsors and others have asked for greater clarification of the proposed rule and its exemptions.

DoL Fiduciary Hearings in 11 Key Quotes

There was continued sparring over commission-based versus fee-based models, with some participants like McNeely suggesting that the rule unnecessarily favors the latter.

DoL Fiduciary Hearings in 11 Key Quotes

Though Labor Department officials have said that they do not want to eliminate commission-based compensation models, representatives from brokerage firms maintained that the rule would do exactly that.

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DoL Fiduciary Hearings in 11 Key Quotes

The fiduciary rule has been in the works for a long time. The Labor Department last proposed a rule in 2010, but then pulled it after facing strong opposition. Opponents and supporters now expect the department to move ahead with the current proposal or an amended version of it.

DoL Fiduciary Hearings in 11 Key Quotes

Is it a sale or is it advice? That was another running theme for discussion at the hearings, with participants deeply divided on whether you could separate the two.

DoL Fiduciary Hearings in 11 Key Quotes

The hearings culminated months of sparring between the DoL’s supporters and critics. Some investor advocates say that firms and brokers hold themselves out as trusted advisors, but deny they serve in such a capacity when they face legal challenges in arbitration or in the courts.

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DoL Fiduciary Hearings in 11 Key Quotes

Kruszewski predicted that if the rule goes into effect, it would have perverse results. Firms like his would effectively be forced to move clients with small commission-based brokerage accounts into fee-based accounts, leading to higher costs for the clients and higher revenues for the firm.