Pay close attention to three areas of the Department of Labor's reproposed fiduciary rule once it's released in July, says Brad Campbell, former head of the DOL's Employee Benefits Security Administration.
First will be the new prohibited transactions exemptions, "and what they will allow," said Campbell (left), who's now an attorney with the Financial Services ERISA Team at Drinker Biddle & Reath in Washington, on the law firm's Inside the Beltway conference call Tuesday.
Fred Reish, head of Financial Services ERISA team at Drinker Biddle, who was also on the call, said that "the fiduciary aspects" of the DOL's proposal were "manageable" and agreed with Campbell that "the prohibited transactions" in the revised rule would be "where the rubber hits the road." Going forward, he said, "the debate will be in the prohibited transaction issues."
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The next area to focus on will be how EBSA applies the rule to the IRA marketplace, which was included in the previous draft. This will "change how providers interact with [IRA] holders," Campbell said.
The revised rule will also include new rules on the rollover solicitation process, Campbell said. "I suspect that [EBSA will say] a conversation about a rollover is a fiduciary conversation," he said. If this is part of the revised rule, "that would present a lot of real difficulties and changes for rollovers."
Campbell told conference call listeners that the "significance" of EBSA's fiduciary rule "is less about the way you make a decision or the quality of the advice, but the business model behind you."
DOL, in changing the definition of fiduciary under the Employee Retirement Income Security Act (ERISA), has "bitten off such a huge issue that we're going to have to spend a lot of time to get through [the reproposed rule] within the 60 to 90 comment period," Campbell said.
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Melanie Waddell
Melanie is senior editor and Washington bureau chief of ThinkAdvisor. Her ThinkAdvisor coverage zeros in on how politics, policy, legislation and regulations affect the investment advisory space. Melanie’s coverage has been cited in various lawmakers’ reports, letters and bills, and in the Labor Department’s fiduciary rule in 2024. In 2019, Melanie received an Honorable Mention, Range of Work by a Single Author award from @Folio. Melanie joined Investment Advisor magazine as New York bureau chief in 2000. She has been a columnist since 2002. She started her career in Washington in 1994, covering financial issues at American Banker. Since 1997, Melanie has been covering investment-related issues, holding senior editorial positions at American Banker publications in both Washington and New York. Briefly, she was content chief for Internet Capital Group’s EFinancialWorld in New York and wrote freelance articles for Institutional Investor. Melanie holds a bachelor’s degree in English from Towson University. She interned at The Baltimore Sun and its suburban edition.
