Financial industry opponents and investor-advocate supporters of a Department of Labor investment advice rule squared off in their familiar positions as the public comment deadline on the measure approached Tuesday.
The Securities Industry and Financial Markets Association called on the DOL to withdraw the proposal and hinted at a legal challenge should the agency issue a final rule.
The measure, which DOL dubbed the retirement security rule, would redefine under federal retirement law – the Employee Retirement Income Security Act – who is a fiduciary and would hold most financial advisors and insurance agents to that standard when making investment recommendations to retirement savers.
The agency is again trying to raise the advice bar for retirement accounts. An Obama administration fiduciary rule was vacated in 2018 by the U.S. Fifth Circuit Court of Appeals.
“We urge the Department to abandon its latest attempt to amend its definition of fiduciary regulation defining investment advice fiduciary, as well as the accompanying prohibited transaction exemption (“PTE”) amendment changes,” Lisa Bleier, head of wealth management, retirement and state government relations at SIFMA, wrote in a comment letter Tuesday. “This version will not survive judicial scrutiny.”
The DOL proposal includes an “overly broad new definition of fiduciary” and “intends to turn many ordinary communications between individuals into ERISA fiduciary conversations,” Bleier wrote.
Many of Bleier’s arguments echo those she and other industry critics made during two days of public hearings about the measure last month. One of the assertions that came up frequently during the discussion was that Regulation Best Interest, the broker standard of conduct
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