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Trone to Financial Service Industry: Heal Thyself, DOL Not Qualified To Oversee Retirement Industry

Trone Says DOL Not Qualified to Oversee Retirement Industry

In the wake of Andrew Puzder withdrawing his nomination as DOL Secretary,  the question of whether the acting Secretary will delay the DOL’s fiduciary rule based on the President’s memorandum, Don Trone, found of fi360 and the fiduciary movement, calls on the regulators to roll back the rule entirely and allow the industry to come up with adequate standards to protect investors.

Recalling visits in 2003 to Washington to meet with regulators in the early days of fi360 and the not-for-profit Trone formed to develop the fiduciary best practices handbook, Trone was politely advised by a senior SEC official not to come back because the government would only make a mess of creating a fiduciary standard. A senior officer at the DOL advised that the DOL would never create a fiduciary standard.

So what happened? Enron whose Investment Committee did not have a standard to rely upon when managing the money in the company’s retirement plan, much of which was in company stock. Trone was immediately put on the DOL’s ERISA Advisory Council.

Trone created the fiduciary handbook and a training program attended by almost 20,000 professionals with the help of industry experts who actually work with investors and Investment Committees, a process he thinks would work better than the current DOL rule which he calls too complex. Trone states that there’s not much of a fiduciary standard left in the DOL’s rule if the best interest contract (BIC) exemptions are eliminated.

When the SEC became concerned about how money managers were reporting their results, rather than create rules that might have had unintended consequences, the industry developed standards that seemed to work well and probably better than if the government had stepped in like an SRO (self regulatory organization). Would an SRO which includes industry experts and plan sponsors do a better job of establishing a workable fiduciary standard that protects the public? Trone thinks so but it seems unlikely or even impossible to put the toothpaste back in the tube.

Fred Barstein

Fred Barstein

Founder & Editor-in-Chief at 401kTV | TRAU | TPSU
Fred Barstein is the Founder & Editor-in-Chief of 401kTV. Fred is also the Founder and CEO of The Retirement Advisor University (TRAU), a collaboration with UCLA Anderson School of Management Executive Education and The Plan Sponsor University (TPSU).Mr. Barstein was also Founder and Editor-in-Chief of NAPA Net.
Fred Barstein

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