12 standout comments on the DOL retirement advice proposal

January 3, 2024 4:19 PM

The Labor Department's "retirement security rule" proposal drew more than 19,000 public comments before the submission deadline earlier this week, according to federal records.

With the potential for changes to the Employee Retirement Income Security Act that would extend fiduciary obligations to more areas of advice such as insurance product sales and rollovers of 401(k) plans into individual retirement accounts, the possible new regulation has fueled criticism among some industry groups and praise among consumer advocates. The sampling of 12 comments below display how the proposal could make a major impact.

After Labor's Employee Benefits Security Administration held a hearing last month and received thousands of public comments by its Jan. 2 due date, experts expect the department to issue the final rule later this year.

Scroll down the slideshow to see how commenters like Charles Schwab, the Financial Planning Association, the Financial Services Institute, the Consumer Federation of America, Better Markets, the Insured Retirement Institute, the Hispanic Leadership Fund and others view the Labor proposal.

And find other coverage here:

Investment Company Institute

A trade, advocacy and research organization representing regulated investment funds:
"We understand and appreciate the Department's interest in ensuring that American workers receive the advice and guidance they need to save for a secure retirement. ICI is deeply concerned, however, that the proposal will have significant unintended consequences and will harm the very retirement savers it is intended to protect. If the proposal is adopted without significant revisions, retirement savers and plan sponsors will have access to less investment information at many critical points — when considering, for example, establishing a plan or retirement account, how to invest retirement assets among available investment products or strategies, whether or not to roll account balances to an IRA or keep assets invested in a current plan, and what type of lifetime payment option or distribution strategy may be appropriate. Retirement savers also will have fewer choices for the type of investment professional they want to work with. Such an outcome will not serve the needs of the millions of Americans saving for their future."

Consumer Federation of America

A nonprofit association representing more than 250 consumer advocacy groups:
"We write in strong support of the Department of Labor's retirement security proposal, which would provide comprehensive protections for investors who turn to investment professionals for retirement investment advice. The Department's proposed rule would ensure that all investment professionals provide advice that is in retirement investors' best interest and that any conflicts of interest do not taint their advice. We urge the Department to finalize this proposal without undue delay."

Charles Schwab

An asset management, wealth management and custody firm whose comment was first reported by

ThinkAdvisor

:
"The proposal is a solution in search of a problem. Altogether, the proposal is wrong as a matter of law and policy, and is destined to meet the same fate as its 2016 predecessor. There are ample opportunities for industry and the Department to partner on expanding the accessibility and affordability of investment advice, where our collective energies would be better expended. The Department should dedicate its efforts there, and not proceed further with this mistaken rulemaking."

North American Securities Administrators Association

A professional and advocacy organization for state financial regulators:
"NASAA writes here specifically to support the elimination of the five-part test under the 1975 rule for determining when a securities registrant acts as an investment advice fiduciary for ERISA purposes because we believe that a recommendation to roll over securities from a workplace retirement plan to an individual retirement account — which for many workers is the most important financial decision they will make — needs to be subject to the ERISA standard."

Financial Planning Association

A membership, networking and advocacy organization for certified financial planners:
"Although we are using this opportunity to raise certain specific concerns around implementation timeframes and the need for clear guidance and compliance tools, the FPA certainly supports measures that enhance retirement investor protection — provided they are understandable by our members, workable, and will not impede consumer access to products and services that are consistent with retirement savers' best interests."

Better Markets

A financial reform advocacy group:
"For decades, financial advisers have been allowed to recommend investment products, trading strategies and account types that cost too much, pose excessive risk, lock up savings in illiquid investments and provide meager returns for retirement savers. The advisers increase their profits, win bonuses or receive lavish non-cash rewards, while the retirement savings of millions of hard-working Americans are eaten away. These practices, driven by adviser conflicts of interest, cost tens of billions of dollars a year in lost retirement assets, and they degrade the quality of life that many workers can sustain in their retirement years. These rules will help put a stop to this practice and protect millions of Americans struggling to save for a decent retirement."

Financial Services Institute

A networking and advocacy group representing independent brokerages and advisors:
"• In its reach, the proposal exceeds the Department's authority under ERISA and has no empirical justification;

• In its execution, the proposal is flawed beyond repair; and

• If adopted, the proposal would unnecessarily layer costs and complexities onto the heavy 'best interest' and other regulation to which our members are already subject, in ways of no practical utility to retirement investors, and thus compromise the availability and utilization of needed investment services for retirement investors, particularly those with smaller account balances.

Accordingly, we are compelled to urge the Department to withdraw the proposal."

Benjamin Edwards

A professor with the School of Law at the University of Nevada, Las Vegas:
"I write to express strong support for the Department of Labor's retirement security proposal because it will significantly improve the current market for investment and financial advice and the outcomes for individuals who obtain financial advice about retirement assets. I have spent much of my career researching and writing about the law and markets for investment advice. Many of my law review articles focus on these issues. I have also had direct experience representing investors who have been harmed by self-serving and conflicted financial advice."

Insured Retirement Institute

A trade group for life insurers, asset managers, broker-dealers, banks, marketing organizations, law firms and other companies in insurance and wealth management:
"From the outset, we want to be clear that we are not requesting, recommending, or proposing modifications to any of the components of the proposal. We do not believe the proposal can or should be 'fixed,' and nothing in this letter should be read to suggest or imply that IRI would support a modified version of the proposal. Instead, our comments are intended to explain the myriad reasons why the Department should withdraw the proposal and discontinue this regulatory project. Rules that deprive retirement savers of access to protected lifetime income products and the professional guidance they need to knowledgeably acquire and use those products run counter to the best interests of American workers."

Chris Tobe

The chief investment officer for New Orleans-based pension consulting firm Hackett Robertson Tobe:
"I want to applaud the Biden Administration on bringing annuity junk fees into the light of day to protect investors. This rule is an important first step. Bowing into industry pressure to enrich annuity salesmen would do much harm to investors."

Hispanic Leadership Fund

A conservative advocacy group representing Hispanic Americans:
"I am contacting you to express our staunch opposition to the Department of Labor's proposed new definition of a fiduciary and the Department of Labor's proposed amendments to related prohibited transaction exemptions. DOL's proposal poses a threat to the ability of many Americans, especially those in underserved communities, to effectively save for their retirement. The proposed amendments are effectively the same (or in some cases worse) than the Department's final 2016 Fiduciary Rule, which was rightly struck down in 2018 by the U.S. Court of Appeals for the Fifth Circuit. HLF commissioned an in-depth analysis of this rule, and the resulting report demonstrated not just the damage done to ordinary Americans' financial well-being during the rule's short existence, but also showed the damage that could be caused by re-establishing this approach."

Ron Rhoades

The director of the personal financial planning program at Western Kentucky University:
"Since 1975, both registered representatives and insurance producers have broadened the scope of the advice they provide. Over the decades, new products have been created, often of a pooled and complicated nature. Gone are the days when most stockbrokers were primarily engaged in the execution of individual securities trades. And gone are the days when annuities were relatively straightforward products. And, over the years, both registered representatives and insurance agents have been trained in relationship-based selling, as well as trust-based selling. It should come as no surprise that, by broadening the scope of their services and advice, and seeking to have customers believe they can be trusted, that it is far easier today than it was in 1940 to conclude that a registered representative or an insurance producer is in a relationship of trust and confidence with a customer."