NAIFA’s Gaudreau in NPR Broadcast on DOL Proposal

NAIFA President Jules Gaudreau appeared on an NPR Morning Edition segment on the congressional response to the DOL’s fiduciary rule proposal.
“This DOL rule, unless it’s modified drastically, imposes a rubric of new regulations hundreds and hundreds of pages long,” Gaudreau told NPR.
The NPR report makes it sound as if the bipartisan members of Congress who have expressed doubts about the DOL proposal are using underhanded tactics to try to scuttle the rule. They are, according to the report, “debating the change very quietly. They are not considering it as a stand-alone piece of legislation.”
In fact, the debate has been very public. Just last week, Gaudreau testified at a public hearing before the House Subcommittee on Education and the Workforce on legislative principles for a bill that would provide an alternative to the unworkable DOL proposal. Reps. Richard Neal (D-MA), Peter Roskam (R-IL),  Phil Roe (R-TN), John Larson (D-CT), Buddy Carter (R-GA) and Michelle Lujan Grisham (D-NM) developed and publicly announced the principles. Last Friday, they even issued a press release saying that they were close to introducing the bill.
When considering whether congressional alternatives would be subverting the authority of the DOL, as the NPR report seems to imply, it’s important to remember that no legislation required DOL to propose or even consider a fiduciary rule for financial advisors. The Dodd-Frank Act requires the Securities and Exchange Commission, not DOL, to evaluate the need for a fiduciary standard for all investments, which the SEC is in the process of doing. 
Finally, the NPR report mischaracterizes what the DOL rule would do.
NPR’s Chris Arnold says the proposal would “block financial advisors from charging excessive fees in workers’ retirement accounts,” which is nearly the opposite of what the rule would do. In fact, the DOL rule would strongly encourage advisors to charge direct fees rather than receiving commissions as compensation. Fee-based models are already available to consumers, but they often do not make sense for lower or middle-income investors. Many so-called wealth management advisors charge fees based on their clients’ assets, but require account balances that are too high for many workers preparing for retirement.
Finally, the report notes that President Obama has said “advisors who currently act in their clients’ best interests will be fine.” This is absolutely untrue. There are already strong laws and regulations to protect consumers from advisors who mislead or defraud consumers. Advisors who receive commissions are subject to stringent FINRA and SEC rules that protect clients. The DOL proposal would add another layer of regulations, on top of the existing ones, that would be costly and nearly impossible for advisors to comply with. Neither these respected and valued financial professionals nor the middle-market clients they would no longer be able to serve would be fine.
  • Posted December 9, 2015 IN

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