Panels Mix Pro/Anti DOL Fiduciary Rule Speakers

By John Hilton

Seventy-five groups are lined up to butt heads at the Department of Labor’s four-day public hearing on its proposed fiduciary rule.

The hearing begins at 9 a.m. Monday and is scheduled to conclude Thursday afternoon. The DOL added a fourth day to its initial three-day plan.

Group slated to speak include the AFO-CIO, the Consumer Federation of America, the U.S. Chamber of Commerce, the American Bankers Association and the Americans for Financial Reform. They are scheduled to appear on three-group panels for an hour. Most of the panels include a mix of pro- and anti-rule groups.

Juli McNeely, president of the National Association of Insurance and Financial Advisors (NAIFA), will speak Tuesday about her concerns with the proposal. Owner and president of McNeely Financial Services in Spencer, Wis., McNeely said she will be accompanied by Dr. Jennifer Knoll, a client.

“Our hope is that we can shed some light on what a real customer client is concerned about and really shed some light on how we work together,” McNeely said this morning.

McNeely acknowledged a split in the financial services industry, where some fee-based advisors support the DOL rule change, and said she plans to address it at the hearing.

In April, the DOL proposed new fiduciary standards governing the advice provided to qualified retirement plans employer plans and individual retirement accounts (IRAs). The DOL has said commission-based advice creates conflicts of interest that cost consumers.

McNeely said her company serves small- to middle-income savers in the $70,000 neighborhood. Fee-based advisors often serve clients with $1 million or more to invest.

“I serve a completely different market than they do,” she said. “And I think it’s important to point out that (low- to middle-income savers) are a very worthy market to serve as well.”

The DOL has told each group it will receive 10 minutes to speak, McNeely said.

She expects it will give her enough time to address potential problems with the best interest contract exemption, known as BIC.

According to the DOL, the BIC “will allow firms to continue to set their own compensation practices so long as they, among other things, commit to putting their client's best interest first and disclose any conflicts that may prevent them from doing so.”

McNeely has concerns regarding interpretation, potential for litigation and timeframe.

“This BIC really has no end date, so am I as an advisor going to be responsible for advice I gave out 20 years ago?” she asked. “At this point, it’s really not clear.”

(Americans for Annuity Protection CEO Kim O’Brien said not only are some aspects unclear but that the rule will bring insurance agents under the fiduciary tent far more often than anticipated.)

Meanwhile, a bipartisan group of lawmakers released a letter sent to DOL Secretary Thomas Perez requesting a restart on the fiduciary rule process. Perez has candidly stated he expects the rule to be amended significantly based on feedback received.

“We feel it is in the interest of our constituents that the DOL re-propose this fiduciary regulation to ensure adequate stakeholder involvement in the notice and comment period during a new formal rulemaking process,” reads the letter released by Rep. Ann Wagner’s office.

The DOL has not responded to the letter, but President Barack Obama administration has said it wants the new fiduciary rule in place before he departs the White House in January 2017.

Once the hearing transcript is published, which takes about a month, a second two-week comment period will commence. The rule could be further revised following the hearing and the comment period.

McNeely is urging NAIFA members to continue writing letters of feedback to the DOL.

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].