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DOL Having Tough Time Getting Industry Data Related to Fiduciary Rule

According to InvestmentNews, the financial industry has declined to provide the Labor Department with data to assess the impact of a proposed rule that would expand the definition of fiduciary for retirement plan advice.  The rule was originally proposed in October 2010, but was withdrawn last September due to criticism from many in the industry and Congress.  Critics claim that the rule would raise broker costs and drive them out of the market.  The Labor Department contends that reforms are needed to protect investors from conflicted advice.

Whether the rule is finalized, and withstands any subsequent legal challenges, may depend on the cost-benefit analysis.  To that end, the Labor Department sent letters to several organizations on December 15th asking them to provide data on rates of return, capital gains and dividends for individual accounts, as well as financial adviser compensation and investor demographics over a 10-year period.  However, the deadline (January 15th, later moved back to February 24th) has passed with no information being provided.  Industry groups said that the request was too detailed and allowed too little time to respond.  Dale Brown, president and chief executive of the Financial Services Institute Inc., which represents more than 100 independent broker-dealers, stated that answering the request would take an enormous amount of time and money and pointed out that it "is the department's responsibility, not the industry's to make the case for why the rule change is needed."

 

 
 
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