DOL Backtracks On Strict Retirement Plan Fiduciary Rule
- Created: Tuesday, 20 September 2011 07:33
A retooled rule should come early next year.
Originally, Labor wanted to enforce an even stricter definition of fiduciary duty on plan advisors, but commission-based industry groups balked at the idea of being forced to act in their clients' best interest.
Simply disclosing conflicts of interest should be enough, they said.
However, Labor's original plan was to ban advisor commissions in retirement plans except in extraordinary cases, which would have made "business as usual" impossible.
It would, of course, also have protected plan participants from being steered into expensive products that don't necessarily perform any better than index funds.
"We have said all along that we will take the time to get this right to ensure that we provide the strongest possible protections to business owners and retirement savers in plans and IRAs," said EBSA Assistant Secretary Phyllis C. Borzi in announcing the delay.
"Investment advisors shouldn't be able to steer retirees, workers, small businesses, and others into investments that benefit the advisors at the expense of their clients. The consumer's retirement security must come first."
Nonetheless, Rep. Barney Frank and others have asked Labor to relax the requirements, add exceptions to allow commission business in plans, or both.
It now looks like they succeeded.