ADISA Career Center

ADISA to Testify Before DOL Regarding Proposed Fiduciary Rule

Aug 03, 2015

ADISA announced today, Aug. 3, that it will testify before the Department of Labor on Aug. 13. The testimony will regard the DOL’s proposed regulation defining who is a “fiduciary” by reason of providing investment advice for a fee, or other compensation, to retirement savers and retirement account. The proposed regulation also includes a “best interest contract exemption.” 
 
The DOL’s Best Interest Contract Exemption would “provide conditional relief for common compensation, such as commissions and revenue sharing, that an adviser and the adviser's employing firm might receive in connection with investment advice to retail retirement investors.”
 
Testifying on ADISA’s behalf will be ADISA’s Legislative and Regulatory Committee Chair John Grady, Chief Strategy and Risk Officer of RCS Capital Corporation. Grady also serves as the vice president of ADISA’s Board of Directors. More than 400 professionals requested to testify at the hearing, according to reports from the DOL. 
 
“ADISA strongly believes that while the intention of the DOL may be well-meaning, the fiduciary rule proposal may have damaging, unintended results that will negatively impact both the investment industry and investors,” said ADISA President Tom Voekler of Kaplan Voekler Cunningham & Frank.  
 
ADISA’s Executive Director and CEO John Harrison noted that, “As a result of the proposed rule’s limits on financial advisors with regard to how they can charge clients, the new definition would have great potential to unintentionally lock out individual investors, especially from younger demographic groups and smaller net worth individuals. Also, the availability of products and programs to such investors would be limited because needed advice and access to these products would be harder to get. As we stated in our comment letter to the DOL last month, the proposal suffers from fundamental flaws, and as a result, should be withdrawn.” 
 
On July 21, ADISA’s board of directors submitted comments to the DOL regarding the proposal. Following is a summary of the comments:
 
 
  • The Proposal unfairly and improperly targets financial advisers who receive variable compensation, and would eliminate the ability of financial advisers and their clients to choose the service model most appropriate to their needs, especially the needs of younger and/or lower net worth individuals.
  • The Proposal represents a piece-meal approach to regulating financial advisers, which will only create confusion and differential treatment of savers and investors generally.  
  • The BIC Exemption would limit the types of products and programs available to retirement accounts and their owners, and potentially negatively impact their ability to meet their savings and retirement goals.
The comment letter can be read in its entirety here