SIFMA and SIFMA AMG Urge DOL to Withdraw Proposal to Expand the Definition of "Fiduciary"

SIFMA and SIFMA Asset Management Group ("AMG") urged the DOL to withdraw its latest version of the "Retirement Security Rule" proposal and accompanying prohibited transaction exemption amendments that would expand the activities resulting in a person being deemed an "Investment Advice Fiduciary."

The proposed rule would change the regulatory definition of an investment advice fiduciary for purposes of Title 1 and Title II of the Employee Retirement Income Security Act ("ERISA").

In a comment letter, SIFMA criticized the proposal as not tailored to the DOL's goals, based on analysis that is "incomplete and flawed," and inconsistent with a prior Circuit Court decision holding against the DOL. Further, SIFMA and SIFMA AMG argued that the DOL "has provided no competent evidence that the proposal is necessary," or that "that the current exemption is not working." The commenters argue that SEC Regulation Best Interest, the DOL PTE 2020-02, and the NAIC’s best interest standard provide "flexibility in practices and firm arrangements [that] provide individual investors with substantial choice in the marketplace, while still getting the benefit of financial professional looking out for their best interest."

SIFMA and SIFMA AMG argued that the extensive changes demanded by the rule could hinder individual investors from obtaining diverse financial advice and choices.