new rules on retirement plan participant advice were supposed to be out in July.
Instead, it looks as if the DOL will submit the new rules in September at the
on votes in Congress last week and reports from regulators that they are
running behind schedule, the new fiduciary standards will take more work,
including a mix of intense lobbying, delicate negotiations and some more
nail-biting, before Americans enrolled in retirement plans can be assured the
investment advice they receive is delivered with their best interest in mind.
The DOL has been mulling changes to the definition of who is a
fiduciary under the Employee Retirement Income Security Act since 2010. The SEC, meanwhile, has
been working on its plan for
nearly three years, and Commissioner Elisse B. Walter recently said it wouldn’t
be finished this year.
Consumers are often confused by the distinction between brokers and
advisors, who work under different standards. To help, regulators believe a
common fiduciary standard is needed for those who provide personalized
investment advice to retail clients.
In its first proposed rewrite of the rules, the DOL stated that broker-dealers who
work with IRA customers should
be covered by the higher standards governing registered investment advisors —
meaning that if someone is giving investors advice on which investments to
make, they need to give it in the best interest of their clients, or disclose
that they are receiving a commission to recommend certain investments.
in the brokerage industry had a tough time swallowing the proposed rules,
particularly because the DOL didn’t include a cost-benefit analysis with its
proposal. Brokerages said the rules would cause them to lose millions of
The newly revised set of the rules would be subject to public comment
within 90 days of their release, said Fred Reish, partner and chair of the
ERISA Financial Services Team at Drinker Biddle & Reath in Los Angeles.
the amount of ongoing discussion, it is not likely that September will bring us
the final set of rules.