SIFMA Raises Concerns about Complexity and the Proposed Fiduciary Rule
At a DOL hearing on a fiduciary rule proposal, SIFMA President and CEO Kenneth E. Bentsen outlined SIFMA's concerns about the proposal and its potentially harmful impact on investors.
Mr. Bentsen explained that SIFMA is not concerned about the best-interest standard itself, but about the proposal being far too complex and establishing a myriad of requirements that will be difficult to implement. The proposal, he said, will "result in less education, fewer choices and greater costs to investors, which is not in their best interest." Mr. Bentsen asserted that developing a holistic standard – for which SIFMA has had longstanding support – would decrease these complexities.
Additionally, Mr. Bentsen expressed concern that the proposed exemptions, which are intended to allow plans and IRAs to continue their current access to the markets, will have the opposite result. Virtually all of the new exemptions and amendments to existing exemptions, Mr. Bentsen noted, are "simply not administrable." He also noted that SIFMA's asset manager members are concerned that the expanded definition of investment advice will hamper their ability to act in the best interest of clients. Under the proposed rule, Mr. Bentsen asserted, asset managers will be able to provide less information and education than they do today.
In conclusion, Mr. Bentsen stated that the DOL's regulatory impact analysis "fails to show how the proposal would benefit the public, ignores potential costs to investors, and greatly underestimates costs to providers."
Mr. Bentsen urged the DOL to consider prior studies and similar proposals, most notably in the United Kingdom, where 11 million investors were priced out of the market due to the decreased willingness of financial advisors to provide advisory services and of consumers to pay increased advisory costs. Mr. Bentsen reiterated SIFMA's support for a best-interest standard and encouraged the DOL to consider SIFMA's positions and concerns.
