ADISA Continues Fight to Protect Retirement Choices for Middle-Income Americans

Nov 12, 2015

The Department of Labor’s proposed fiduciary rule will make it harder for middle-income Americans to save and plan for retirement. To help avoid this, ADISA, the Alternative & Direct Investment Securities Association, has partnered with other financial organizations to launch an advertising campaign that encourages public and financial professionals to take action to protect retirement choices by contacting members of Congress. 
“We are excited to be part of a larger coalition that recognizes that this is an important moment for our industry, one that could have a detrimental effect on our members and the investing public,” said ADISA President Tom Voekler, managing partner with Kaplan Voekler Cunningham & Frank. “We are excited to be recognized as one of the leading organizations in this campaign and feel that this is a very important step in our advocacy, along with our Congressional testimony and other outreach to the Hill.” 
The Department of Labor’s proposed regulation defines who a “fiduciary” is 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.”
ADISA’s Board of Directors chose to take part in this initiative at the invitation of SIFMA (Securities Industry and Financial Markets Association), which spearheaded the campaign. The other organizations involved are FSI (Financial Services Institute), FSR (Financial Services Roundtable), ICI (Investment Company Institute), and IRI (Insured Retirement Institute). The ad campaign, which launched in early August and ran through mid-November, includes both digital and print components, and links to the microsite
As of Nov. 6, grassroots activations through the microsite have reached 11,285. The ads have produced more than 150 million impressions, and close to 450,000 clicks to the microsite.
“We’re honored to be among the coalition’s leadership on this issue,” said John Harrison, ADISA’s executive director/CEO. “The team of six associations has already started work on broadcasting political ads targeting important congressional leaders, staffers and their districts. We stand ready for the next phase of the fight on this—it’s that important to the American investor that we keep retirement advice and  product choices diverse and available. I urge all to visit the website to add your voice to the battle.”
John Grady, ADISA’s vice president and legislative & regulatory committee chair, testified on ADISA’s behalf regarding the proposed rule before the DOL on Aug. 13. He added: “The DOL's proposed rule-making was the subject of nearly four full days of hearings during August. ADISA appeared during those hearings, as did many other individuals, companies and associations, and summarized its views on the proposed rule changes and so-called ‘best interest contract exemption.’ Under required administrative action protocols, the DOL has to consider the comments received and determine whether to make any changes to its April 2015 proposal. In the meantime, various members of Congress are, with prompting from ADISA and other organizations, seeking to convince or direct the Department to either suspend its rule making efforts or substantially revamp its proposal.”
On Sept. 23, ADISA submitted comments to the DOL on the Panel 23 of the Aug. 13 hearing. ADISA’s letter provided follow up on questions asked during hearings, specifically those posed by DOL staffer Judy Mares. Ms. Mares asked to be “walked through a typical non-traded REIT…,” and focused her questions in part on non-listed REIT disclosure documents and minimum requirements for purchasers. Panel responses focused primarily on the regulatory aspects of non-listed REITs, including minimum net worth and income requirements imposed by the various states. While ADISA provided a broad perspective on non-listed REITs and BDCs in the course of the hearings, the discussion around these products and other direct participation programs did not address a host of issues that ADISA’s board believes are integral to understanding the role that these products play in retirement savers’ portfolios, both large and small. The major points of the follow up comments included the following:

  • Descriptions of non-listed REITs, BDCs, and other DPPs.
  • Characteristics of the above with special attention to their channels of access.
  • Importance of non-listed alternatives for all investors
  • Potential harm if personal financial advice is discouraged