ACLI Criticizes DOL's Proposed Fiduciary Rule
The American Council of Life Insurers ("ACLI") submitted a statement to the Health, Education, Labor and Pensions Subcommittee criticizing the Department of Labor's proposed fiduciary duty rule. The ACLI statement was submitted at a Subcommittee hearing titled "Restricting Access to Financial Advice: Evaluating the Costs and Consequences for Working Families and Retirees."
According to ACLI, the Department of Labor's proposed fiduciary rule will "restrict activities that encourage low-to-moderate-income Americans to save, stifle the formation of small business workplace benefit plans, and [hinder assistance to] savers and retirees with securing guaranteed lifetime income throughout retirement." ACLI argued that the rule will reduce the range of existing workable prohibited transaction exemptions ("PTEs") that traditionally have granted workers greater access to retirement savings accounts and provided integral assistance with retirement planning.
ACLI urged Congress and the Administration to produce a "workable" rule. Guiding principles should include: (i) a broadly applicable best-interests standard under which advice given by financial professionals concerning investments, distributions and rollovers would be required to serve the best interests of their ERISA plan and IRA customers; (ii) a "workable prohibited transaction exemption" that would allow financial professionals to provide investment, distribution and rollover assistance as long as they served the best interests of the customer and the financial professional's incentives were disclosed in their entirety; (iii) a "seller's exception" that would prohibit financial professionals from serving as fiduciaries if they were openly selling products or services rather than advising an investor; and (iv) a new rule that would "substantially restrict the types of investment education that can be provided without triggering potential fiduciary liability" by extending the current education rules for plan sponsors and IRA owners and the education itself to cover distributions and rollovers.
ACLI emphasized that it hoped to be a valuable ally to Congress and the Administration in working toward the common goal "of providing financial security and peace of mind for American families."