Since the announcement six years ago that the DOL was pondering the thought of redefining the definition of Fiduciary, until earlier this year when the DOL finally unleashed the fruits of their labor, the industry was concern as to “exactly what a new version” would look like. Now that the new version of the DOL regulation has been distributed and read by industry experts, financial advisors and compliance officers throughout the land, very few have had a kind word to describe what the industry has been subjected to. And now we have yet another new idea coming from yet another regulator which feels the need to bring clarity – if not sanity – to the discussion. The Securities and Exchange Commission (SEC) may indirectly become the most recent entrant in the theater of the oversight for the new rules of the of the investment advisor fiduciary.
What Will Be Occurring
Based upon the new DOL Fiduciary Rule, slated for a staggered implementation over the next 3 to 15 months – is sweeping reform in the world of the retirement advisor and Individual Retirement Account advisors. The reform as designed will demonstrably change the way retirement plan committees and benefit committees interact with their existing investment professionals. Many fee structures will change. With few exceptions, operating agreements between plan sponsors and retirement advisors will need to be reviewed, revised and executed.
House Republican Actions Last Week, Could Spell Relief
On Friday, September 9, House Financial Services Committee Chairman, Jeb Hensarling (R-TX) formally introduced the Financial CHOICE Act, which is a Republican-drafted alternative to the Dodd-Frank Act which, according to some, has contributed to the weakest and slowest economic recovery since at least World War II.
According to the Act, the SEC would be required to conduct an extensive cost-benefit analysis prior to proposing any new SEC Fiduciary Advisor Rule. This type of analysis is welcomed by many in the retirement industry, since the new fiduciary regulation from the DOL has been disparagingly described as an $8 Billion dollar fix to a $4 Billion dollar problem.
