The Department of Labor proposal to impose the fiduciary standard on retirement accounts has met fierce opposition from the industry and Republican lawmakers, who have threatened to kill the rule in Congress. But at least one group critical of the new rule has decided to go with the flow, more or less.
The rule’s finalization in the first quarter of next year is all but inevitable, Brian Graff, executive director of the American Society of Pension Professionals and Actuaries, said at the group’s annual conference this weekend, according to InvestmentNews. “We need to improve the rule. We’re not trying to block it,” he said, quoted in the trade paper. Any congressional attempts to block it could be vetoed by President Barack Obama.
Despite finding merit in the arguments of the rule’s critics — who say it will drive up costs and make financial advice too expensive for lower-net-worth investors — Graff added that trying to sue the rule out of existence through the courts is “a long shot.”
However, Graff said that the ASPPA is “basically begging” the DOL for more time for the rule’s implementation. And the group is asking the agency to modify it so that plan advisors would be allowed to roll over 401(k) plan participants into IRAs without violating the rule, despite IRAs carrying higher fees, as long as the compensation in the IRAs is level regardless of the investment products included, writes the publication.
So, instead of attacking the DOL proposal per se, ASPPA members who visited Capitol Hill on Tuesday focused on a separate DOL proposal they say would give state-run retirement plans more leniency than privately run plans, InvestmentNews reports.
But, even as critics and supporters of the fiduciary rule air their differences, a new study reveals that many investors are still in the dark as to what a fiduciary is. Among non-millionaire investors with a net worth of at least $100,000, just a little over half (54%) believe that a fiduciary is a financial professional who puts client interests first, although that figure rises to 67% for investors with a net worth of $5 million to $25 million in investable assets, according toSpectrem Group’s Millionaire Corner e-publication.
Four in ten non-millionaire investors, meanwhile, appear to admit that they don’t know what a fiduciary is. The study shows that just 57% said they know what one is, although that rose to 75% of millionaires and 89% of ultra-high-net-worth investors.
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