Fiduciary outburst: DoL deluged by more than 1,000 comments

ByAndrew Welsch, Maddy Perkins, Tobias Salinger

March 27, 2017 3:57 PM

The fiduciary rule is the industry's perennially hot topic ― even nearly a year after the Department of Labor unveiled the regulation.

Firms, advisers, investors and even other regulators have joined the commentary melee. More than a thousand letters and emails have been posted to the Labor Department's website; 400 were posted late last week alone.

Click through to see some of the most critical and supportive remarks on the fiduciary rule's fate.

No holding back fiduciary comments listicle March 27

The fiduciary rule is the industry's perennially hot topic ― even nearly a year after the Department of Labor unveiled the regulation.

Firms, advisers, investors and even other regulators have joined the commentary melee. More than a thousand letters and emails have been posted to the Labor Department's website; 400 were posted late last week alone.

Click through to see some of the most critical and supportive remarks on the fiduciary rule's fate.

Danielle L. Schultz (adviser)

Any reasonable expert in the field recognizes that this rule is expressly designed to protect consumers, and the only reason the brokerage industry has, and continues, to oppose it is because it puts reasonable restrictions on their unethical behavior and will prevent them from hoodwinking and exploiting the consumer. The consumer should be able to rely on getting advice that is solely in their best interest. Please proceed with implementation as planned by April 10.

Tim Holt (adviser)

Increasing regulation and discrimination against advisers has taken this job to a low. We always do what we feel is the best method for investing the clients' money. We always work hand in hand with our clients to determine what is in their best interest. It is rare that two people would have the exact same interest.

Confusing every [adviser] and client about what the future holds for this industry with this rule is very bad. At the least, it increases our cost of doing business.

Representative Gwen Moore Democrat from Wisconsin Bloomberg News

Representative Gwen Moore, a Democrat from Wisconsin and ranking member of the House Financial Services Monetary Policy and Trade Subcommittee, questions witnesses during a hearing in Washington, D.C., U.S., on Wednesday, Sept. 7, 2016. The hearing examined the governance of Federal Reserve banks and how it relates to the conduct of monetary policy and economic performance. Photographer: Andrew Harrer/Bloomberg

Andrew Harrer/Bloomberg

Rep. Gwen Moore (D-Wis.)

I firmly believe that when a customer sits down with a retirement adviser, the customer should have an enforceable expectation that the adviser acts in their best interest. The cost of conflicted advice for consumers is simply too high for anyone saving for retirement. I understand a few companies are not ready for full implementation, but the rule includes a safe harbor from litigation for good faith compliance. Bottom line is that the delay of the rule is a disservice to my constituents who rely on conflict-free advice to save for a secure retirement.

Grant Harms (investor)

The DoL thinks that they are looking out for me, but they are inadvertently causing me to give away more of my retirement money to my financial adviser. Let us think for ourselves. If my financial advisers are not acting appropriately, then I will fire [them] and find a new one.

Thomas DiNapoli, NYS Comptroller

A decision to delay implementation of the fiduciary rule would deprive millions of Americans and New Yorkers who are investing for their retirement the peace of mind that their advisers are providing them investment recommendations with their best interests at heart.

The departure of advisers who are not willing to meet the standards set by the fiduciary rule would be a positive result for workers who are struggling to save for their retirement. Further, the rule would level the playing field for those advisers who already put their customers’ interests first. And too, the expected benefits to workers trying to save for retirement would far outweigh the rule’s moderate costs to implement.

AXA Asia Pacific Holdings stand in Melbourne, Australia on Tuesday, March 30, 2010

The headquarters of Axa Asia Pacific Holdings Ltd. stand in Melbourne, Australia, on Tuesday, March 30, 2010. National Australia Bank Ltd. and Axa SA agreed to buy asset manager Axa Asia Pacific Holdings Ltd. for A$13.3 billion ($12.3 billion) in the second-biggest acquisition in Asia in the past year. Photographer: Carla Gottgens/Bloomberg

Carla Gottgens/Bloomberg

AXA Advisors (signed by CEO David W. Karr)

What is... clear is that financial firms such as ours have spent millions of dollars preparing for the rule implementation and, if a delay is not quickly enacted, will spend millions more in the coming weeks despite the strong possibility it will ultimately be repealed or substantially revised. For example, a mailing to our customer base solely for the purpose of complying with the rule's April 10 applicability date has been estimated to cost approximately $500,000. Additional costly IT and infrastructure work remains outstanding which could be put on hold if a delay is rapidly issued.

…

We urge the department to approve the proposed delay, and, moreover, to extend it to 180 days in order to allow for more critical analysis of these issues in accordance with the guidance in the presidential memorandum.

Public Citizen (investor advocacy group)

[The] DoL crafted the final rule in reliance on extensive evidence, including thousands of comments from the full array of interested parties … No further study is needed, and no further delay is warranted. The rule should be implemented as provided, without delay, to protect American retirees from those who would threaten their hard-earned savings with conflicted investment advice.

Voya Financial

In our comment letter on the original rule proposal, we highlighted a number of concerns with the rule as proposed, few of which we addressed in the final rule. Among other comments, we expressed concern that enforcement by private litigation will have unintended consequences, and work against, rather than promote, investors' interests, that the best interest contract exemption should be replaced by a "customer's Bill of Rights" and that historical carve-outs for education communications should be retained to ensure investors continue to have access to information relating to their investments. We will not repeat these or other substantive comments in full in this letter, which is focused only on the proposed implementation delay. We raise them to highlight the extent of the concerns we expect to be raised during the public comment period on the fiduciary rule, and the need to delay implementation long enough to give the department time to conduct a thorough and balanced review.

wells-fargo-bloomberg-real-estate-iag-2016

Wells Fargo (signed by David Carroll, head of wealth and investment management)

…we fully support, at a minimum, a 60-day delay of the rule’s applicability date. Furthermore, we respectfully request that the department find good cause to issue a final rule effectuating the delay by no later than April 10, 2017. To do otherwise could create legal uncertainty with respect to the Rule’s implementation. Moreover, we believe a longer extension is warranted and respectfully request that the department extend the applicability date of the rule by 180 days.

North American Securities Administrators Association

The final rule, adopted in April 2016 and with a first effective date of April 10, 2017, represents an in-depth, multi-year, deliberate and thoughtful rulemaking exercise. It also represents the benefits of the administrative rulemaking process – one that is careful and considered, not rushed. The rulemaking is already changing industry practices for the better. Press reports show that in direct response to the rule, major broker-dealers have announced and undertaken significant changes to sales practices that benefit investors, including by lowering commissions, reducing certain conflicts of interest, and improving disclosure.

In short, the department’s fiduciary duty rule and the process by which it was promulgated is sound.

Mike Rothman
NASAA President
Minnesota Commissioner of Commerce

Rasa Silenas (investor)

Please do not reduce consumer safety by weakening the fiduciary rule for retirement investment. I'm probably in the top few percent of savvy investors and even I can't keep all the advice straight all the time. For the average middle class saver, the trustworthiness of a financial adviser is critical. And in the long run, conditions that lead people to make less-than-optimal decisions risks creating more poverty, which costs us all more in either safety-net programs or increased burden on families.

Frances-Perkins-Building-department-of-labor-Bloomberg-News

The U.S. Department of Labor headquarters stands in Washington, D.C., U.S., on Wednesday, July 3, 2013. The U.S. Department of Labor is scheduled to release unemployment rate figures on Friday, July 5. Photographer: Andrew Harrer/Bloomberg

Andrew Harrer/Bloomberg

Ann Novosel (adviser)

I am very concerned about the current DoL fiduciary rule, as it is written. My business will be greatly burdened with newly required, ineffective paperwork, to maintain financial planning services for my clients. I am already looking at which clients I will not be able to accept, because they will start out as small clients. I built my business with small clients, many now are retiring comfortably. These are the same types of clients I would not be able to afford to take on, under the new regulations. Financial planners should be fiduciaries. The currently proposed regulations need to be revised.

Robert Drummond (investor)

I am a voting citizen smart enough to make my own financial decisions. I absolutely oppose [the fiduciary rule]. This rule should be delayed and repealed immediately. Get the federal government the hell out of our financial lives. We don’t need a babysitter!

Lois Neuberger (investor)

I thought this was a joke when I read it at first. Is there one arm of government that will do the right thing? I support the conflict of interest rule. Close the loophole and protect the investors and their retirement. Not the already wealthy brokers.

william-galvin-Massachusetts-regulator-bloomberg-news

William Galvin, Secretary of then Commonwealth of Massachusetts, speaks during a hearing of the House Financial Services Capital Markets Subcommittee on trading practices in the Mutual Fund industry in Washington, DC November 6, 2003. Photographer: Chris Kleponis/Bloomberg News.

Chris Kleponis/Bloomberg News

William Galvin, Secretary of the Commonwealth of Massachusetts

We note that the form comment letter submitted by many financial firms and salespeople promotes the approach of addressing adviser conflicts of interest by merely disclosing those conflicts to the customer. Such an approach is fundamentally wrong because it represents, at best, a watered down fiduciary duty. Moreover, allowing advisers to "cure" conflicts through disclosure would heighten the confusion that many investors now have regarding whether their broker is merely a salesperson or an adviser who must act in their best interest.

The fiduciary rule represents a victory for retirement savers and for this country as a way to address the retirement savings crisis.

Judy L. Loy, CEO of Nestlerode & Loy

Because of the uncertainty regarding this rule, and the president's memorandum, we have not communicated to clients the ways in which the rule will affect the products and services available to them. We strongly believe that clients will be bewildered, confused and uncertain if changes are announced that then need to be revisited in light of the president's memorandum. We urge you not to disrupt the retirement market in this manner. The rule should not be applicable until the questions raised by the president are addressed and the new secretary of labor determines whether rescission or revisions are required or appropriate.

Department of Labor. man walks in front of building by Bloomberg News

John Black (adviser)

The 60-day review period granted may not be a sufficient amount of time to adequately complete the task at hand, as there is so much to consider.

Ameriprise

…given the shadow this regulation has cast on annuities, we are concerned that financial advisers may be less likely to consider an annuity for a client out of fear of being second guessed, in hindsight, even when recommending the annuity is clearly in the best interest of the client, given that product's unique ability to guard against market downturns that might have put a retirement nest egg in jeopardy. The proposed delay will allow advisers to continue to have the clarity and confidence necessary to provide the most prudent investment advice while awaiting the further guidance from the department that was requested by the presidential memo.

Joseph E. Sweeney
President, advice & wealth management, products and service delivery
Ameriprise Financial Services