Read on Twitter
The Department of Labor has announced it will allow its controversial advice rule to take effect as scheduled next Tuesday. While we did not support the rule’s adoption, we support that decision. https://www.dol.gov/newsroom/releases/ebsa/ebsa20210212
While the rule may be better than nothing in the short term, this flawed rule must not be the stopping point for the Department’s efforts to better protect retirement savers from conflicted advice.
DOL must act to ensure that its best interest standard has meaning, that it is backed by real restrictions on harmful conflicts, and that it applies to all rollover recommendations.
We take comfort in statements in the release suggesting new leaders at DOL appear to recognize the need for additional rulemaking to strengthen the standard and close loopholes in the definition.
It is worth noting that many of the weaknesses in the DOL rule are rooted in its reliance on the SEC’s vague and undefined Regulation Best Interest.
But Reg BI’s chief weakness – that key terms like “best interest” and mitigation of conflicts are undefined – could now be its chief strength, if new leaders at the agency interpret and enforce these requirements to the benefit of investors, as we expect they will.
That suggests that the best route forward will be for DOL and SEC to work together to ensure that investors get protections of a real best interest standard, and real restrictions on harmful incentives, in retirement and non-retirement accounts alike.
I have, over the years, written somewhere in the neighborhood of 30 comment letters to the SEC and DOL on this topic. Looks like it could be time to dust off those talking points one more time.
