The U.S. Securities Industry and Financial Markets Association (SIFMA) has set out its range of objections to a proposal from the U.S. Department of Labor that would introduce a new fiduciary duty for retirement advice, in a series of letter published on Monday
The proposed rule will harm investors by limiting access to financial advice, reducing investor choice, ultimately raising costs for investors, SIFMA argues.
“Our comments reflect SIFMA’s deep concerns that the Department has proposed a rule that would harm American investors, while completely re-casting the … definition of who is a fiduciary when providing investment advice for a fee,” SIMFA says in a statement.
In addition to expanding the list of fiduciaries, the trade group argues that the proposal creates a “very limited, inflexible, and prescriptive exceptions and exemptions that do not work and will not be in the best interest of American retirement investors.”
The eight comment letters address the proposed fiduciary rule itself, the various proposed exemptions, and the views of the SIFMA Asset Management Group, among other things.
The letters also include a criticism of the proposal’s regulatory impact analysis, suggesting that 57% of retirement accountholders could lose access to advice if the rule is adopted. In addition, they include a commentary on the operational impact of the proposed rule, warning that several requirements will be unfeasible for firms to implement within existing business, operational and compliance frameworks, and that he proposal would impose estimated total start-up costs of US$4.7 billion and ongoing costs of US$1.1 billion.
“We agree with the DOL that more can be done to help Americans save for retirement and that there should be a best interests standard in place; however, we believe DOL is the wrong regulator to be in the lead here and the rule as written completely misses the mark,” says Kenneth Bentsen, Jr., president and CEO of SIFMA, in a statement.
“SIFMA’s comment letters reflect our ongoing concerns that the DOL’s proposal would cause harm — particularly to low and middle-income retirement savers — by limiting investors’ access to choice and guidance, while raising the cost of saving,” he adds.