DOL Fiduciary Rule Fight To Resume When Congress Returns

All is quiet on the fiduciary front -- for now.

Opponents of the Department of Labor’s attempt to regulate broker-dealers say they anticipate a pitched fall battle over the so-called Conflict of Interest Rule.

Since the DOL’s four-day public hearing wrapped up two weeks ago, the department has been quiet. A transcript of the hearing’s 25+ hours is expected to be released soon after Labor Day.

DOL spokesman Michael Trupo did not return email messages for comment on the release date.

Opponents say Rep. Ann Wagner, R-Mo., will re-introduce her bill, called the Retail Investor Protection Act, when Congress returns next month. It would prohibit the SEC from issuing a uniform standard of conduct without first showing that harm would come to retail investors without it.

The bill would also block the DOL from acting on a standard of care until the SEC issued its final ruling on standards governing the conduct of brokers.

Groups such as the Americans for Annuity Protection (AAP) and the National Association for Insurance and Financial Advisors (NAIFA) are working behind the scenes to keep up the lobbying pressure through the end of the year.

AAP recently held a webcast to encourage members to keep writing their legislators and giving the DOL feedback. A second public comment period will close two weeks after the transcript is published.

The DOL has signaled its willingness to compromise on some aspects of its proposal – which would require anybody working with retirement funds to act as fiduciaries. But Labor Secretary Thomas Perez said the agency is moving forward with a rule this time. A similar effort in 2011 fell apart amid industry pressure.

The DOL claims bad advice is to blame for up to $17 billion in retirement fund losses annually. Industry critics say the rule will force advisors to serve only high-end accounts, costing small savers access to importance financial advice.

“One of the things that is most aggravating is that the entire focus is on expenses and no focus is on the value of the advice, the value of the relationship that the advisor or agent is creating with his or her client,” said Richard M. Weber, a 45-year veteran of the life insurance industry and AAP board member.

Events such as the wild fluctuations in the stock market over the past 10 days highlight the need for financial advice, said Juli McNeely, NAIFA president.

“It seems like every time there’s a significant drop in the market, we get calls from concerned clients,” she said. “We remind them that we have a plan in place designed to protect them and ensure their financial security over the long haul. We can talk them out of making rash decisions that could derail their long-term plans.”

NAIFA members are meeting with legislators and continuing to provide feedback, said McNeely, adding that she is meeting with her congressman Friday. The organization has requested another meeting with the DOL, she said, but has not heard a response.

"We don’t feel we’re letting off of the gas at all," McNeely said.

Weber said he expects a final rule from the DOL as early as December, or as late as February. It is likely to be a political fight from there, he added. Republicans largely oppose the new rule, and have won support from many colleagues across the aisle.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.