Financial groups to DOL on proposed new fiduciary rule: Give us a '60-day extension'

Nearly 20 trade associations pressed the Labor Department for more time to comment on a proposed rule aimed at eliminating retirement plan “junk fees,” saying it “makes significant and unanticipated changes to the current regulatory framework” and will require significantly more time to analyze and understand how it would impact access and choice for retirement savers.

The Biden Administration announced the Retirement Security Rule October 31. The rule’s objectives are to ensure retirement advisors provide advice in the best interest of savers when offering insurance products and fixed index annuities, when advising on 401(k) rollover assets to an IRA, and when advising plan sponsors – including small employers – about which investments to include in 401(k) and other employer-sponsored plans. The proposal includes a 60-day public comment period that ends Jan. 2.

In a letter dated Nov. 8 to Lisa Gomez, Assistant Secretary of Employee Benefits Security Administration at the Department of Labor, the associations called the comment period “brief” and “unprecedented.” They pointed to longer commenting periods that were allowed in 2010 and 2016 when previous rules addressing the definition of a fiduciary were proposed.

“We believe that DOL should again provide at least a similar comment period, especially for a proposal that is nearly 500 pages long,” the letter said. “Additionally, the timing of the publishing of the Proposed Rule in the Federal Register means that the comment period will fall over multiple federally recognized holidays. This only further complicates and limits the ability of industry stakeholders and other interested parties to provide meaningful input on the Proposed Rule.”

The letter asks for a 60-day extension of the comment period and requests that a public hearing scheduled for mid-December be moved to after the comment period followed by an additional 30-day comment period.

“By setting the hearing date before the close of the comment period, DOL is communicating that this is merely a ‘check the box’ exercise, rather than an effort to receive helpful feedback,” the letter said. “Holding the hearing after the end of the comment period would allow for DOL to ask questions about the comments that they have received, fostering clarification and better understanding. Commenters would also be able to provide feedback to the department on the input provided by others.”

Among the signers were the American Benefits Council, the Financial Services Institute (FSI), the Insured Retirement Institute, and the U.S. Chamber of Commerce.

Related: Biden cracks down on ‘junk fees’ in 401(k) plans with proposed DOL fiduciary rule

“While we continue to diligently and thoroughly review and analyze the rule, we are concerned about its potential negative impact on Main Street Americans’ access to financial advice as they save for retirement,” said FSI President and CEO Dale Brown. “The Department of Labor first pursued the fiduciary rule over a decade ago, and during this time, the regulatory standards and industry landscape have substantially evolved. The SEC has implemented Regulation Best Interest (Reg BI), and our members are committed to faithfully serving their clients and complying with Reg BI and all conditions in DOL PTE 2020-02. It is imperative that new regulations harmonize with Reg BI. Introducing more conflicting regulations would be unnecessary and could potentially hinder middle-class Americans’ ability to achieve a financially secure retirement.”

When asked if the department considered offering more time for comment on the proposed rule at an event Nov. 6, DOL Principal Deputy Assistant Secretary at EBSA Ali Khawar said DOL has been working nearly continuously on fiduciary rules for 15 years and he didn’t think the department needed more time to gather comments.