Industry groups say the DOL’s efforts are a waste of effort, because the fraction of brokers who do take advantage of clients is small. The Securities and Exchange Commission, the states and self-regulatory organizations already police the industry for such conflicts, they say.

“There is no evidence of a crisis, no evidence of a problem,” Kenneth Bentsen, president of the Securities Industry and Financial Markets Association, known as Sifma, Wall Street’s largest lobbying group, said this summer.

Regardless, the moderator of Wednesday’s CFDD panel, ERISA attorney Fred Reisch, said he expected the new fiduciary standard regulation to be finalized before the Obama administration leaves the White House.

“A fiduciary regulation is likely next year,” he told the audience.

Kevin Crain, managing director of Integrated Benefits at Bank of America Merrill Lynch, expressed the sort of frustration heard from many in his business.

“Does the client today even think there’s an issue?” he asked. “Most investors believe the person they’re dealing with is providing that higher standard of care. You don’t want to take away choice or impact cost.”

Morgan Stanley’s Rieck said the bigger issue was retirement coverage. “Making it more difficult to delivery retirement services means unintended consequences, with a detrimental impact on coverage. If you make it harder on someone to deliver these services, that’s going to have an impact,” he predicted.

David Reich, an executive VP at LPL Retirement Partners, said that the regulation will force his firm to shut out the “occasionalists.”

“We’ll have to limit their interaction (with plan sponsor prospects),” he said. “They don’t have the expertise to be a fiduciary.”

The panelists expressed varying degrees of concern about potential new regulators regarding IRA rollovers, retirement income projections and new retirement vehicles under considerations by state legislatures.

The DOL, Reisch said, may “significantly” limit the recommendations advisors are allowed to make to retirees considering taking distributions from their 401(k).

Rieck said the idea that the DOL might make it more difficult for an advisor to make what she or he considers appropriate for their client “is a little more than odd.”

“Folks need advisors,” he said. “The idea that you’d push someone away they’ve known for a number of years is not very friendly to participants.”

On still-pending retirement income projection rules, Crain said the effort was “noble,” but that regulators should try to be sure to stay flexible.

“It must be understandable to participants,” he said. “Having 30 pages of rules won’t help.”

The panelists all expressed concerns over efforts by as many as 17 states to implement new retirement plans for private-sector workers employed by firms without a plan in place.

“We don’t need a patchwork of regulations,” Rieck said. “There are plenty of other solutions out there. The states are ignoring them. They don’t need to create another product.”

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Retiring boomers pumping billions into IRAs
Brokers prosper, retirees suffer on 401(k) rollover boom