National Association of Insurance and Financial Advisors President Terry Headley (right) says he's concerned the Department of Labor's proposed fiduciary rule could make it harder for consumers to get investment help.
Headley submitted Tuesday a letter to DOL, expressing his concern that the definition rule would make it difficult for NAIFA members to serve the middle-market, where commissions are the dominant form of compensation.
"NAIFA is concerned that the current proposal to expand the definition of 'fiduciary' will have the effect of substantially reducing consumer access to investment education and advice, and thus create a substantial advice gap for potentially millions of individuals who need professional guidance to understand and make investment decisions about their retirement accounts."
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The letter documents a December 2010 LIMRA survey, which gauged consumer preferences and how financial advisory services are actually delivered to "Main Street" investors.
"While 50% of consumers surveyed said they have used a financial advisor, only 19% of this group (less than 10% of all consumers) had more than $250,000 invested with the help of professional advisors. Most registered investment advisers will not service accounts below this threshold, so the vast majority of American households have access to professional investment advice only through commission-based arrangements."
In his comments, Headley also makes the following points:
- Retirement investors will lose access to investment recommendations without a robust seller's exception.
- The expanded fiduciary definition should not apply to IRAs
- The fiduciary definition is overly broad for investment advisors registered under the 1940 Act
- The fiduciary definition is overly broad for any person making individualized investment recommendations.
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