All public comments on the controversial Department of Labor fiduciary rule must be filed by 11:59 p.m. Monday.
The deadline is the second of two put forth by the DOL. The first deadline passed March 17, and was to accept comments on a 60-day delay that was published April 7. Monday’s deadline is on the substance of the rule and the directive set forth by President Donald J. Trump.
The agency is accepting comments through the rule posting on the Federal Register.
The DOL regularly posts comments and petitions as it receives and processes them. It posted 1,166 comments and 24 petitions on the 60-day delay.
While the majority of feedback opposed the delay from pro-rule quarters, a closer look reveals skewed results. About 15,000 commenters and petitioners support a delay of 60 days or longer, while 178,000 commenters and petitioners “oppose any delay whatsoever,” the DOL said.
However, the bulk of "comments" opposing the delay were actually signatures on a petition submitted by CREDO Action, a liberal activist group. This group collected more than 119,000 signatures, and a general “Do Not Delay” the rule petition signed by 46,659 people.
Evidence indicates the DOL takes the feedback seriously. The agency has indicated it will remain open to helpful comments even after the deadline.
“Many believe that the DOL will provide further extensions as it tries to digest numerous comments submitted both against and for the DOL rule,” said Joseph S. Adams, a partner at international law firm McDermott Will & Emery.
“This has forced many service providers – and their clients – to carefully consider what actions they should take to adjust their current business models.”
Thomas Perez, former DOL secretary, indicated that the agency made changes to the rule based on the comments it received in 2015.
Three Focus Areas
In his directive, Trump ordered the delay so the DOL could study whether the rule:
• Harmed or is likely to harm investors due to a reduction of access to certain retirement savings products, accounts or information.
• "Resulted in dislocations or disruptions within the retirement services industry that may adversely affect investors or retirees."
• "Is likely to cause an increase in litigation, and an increase in the prices that investors and retirees must pay to gain access to retirement services."
The questions rely on whether studies completed by the Perez-led DOL are fair and accurate. Opponents, led by Sen. Elizabeth Warren, D-Mass., are using the studies to claim that the 60-day delay is costing investors $3.7 billion over 30 years.
Critics say those studies, which the DOL cites to claim that conflicted advice costs investors $17 billion annually, are dubious at best.
The DOL pegged the "conflicted advice" costs at 1 percent a year, which is where they came up with the $17 billion figure.
The DOL cited three studies for its 1 percent loss claim, said Jack Marrion, longtime annuity consultant, but only one of them even partially supports the conclusion.
In 2012, the National Bureau of Economic Research found that a group of investors represented by brokers earned 0.9 percent less a year than a do-it-yourself group.
The retirement plan gave participants two options: they could meet and work with a broker, or they could pick their own investments on their own, Marrion said.
“The participants who chose to use a broker were younger and less experienced,” he noted. “When asked why they chose the broker option, 70 percent said the ability to meet with and talk to a broker was important to them. This brokered group recognized they needed professional help and chose to pay for it.”
To use the NBER study assumes that the typical investor invests the same as the study participants, and, more importantly, ignores the fact that these employees had a choice and chose to use a broker, Marrion said.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at firstname.lastname@example.org.
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