Brokerage Industry Rallies Employees to Push for DOL Rule Delay
With just 14 days to comment on the Department of Labor’s proposal to delay implementation of its fiduciary rule by 60 days, brokerage firms are rallying employees to communicate their views in favor of a delay.
LPL Financial on Tuesday sent its 14,100 affiliated independent brokers an “Action Requested: Ask the DOL to Finalize the 60-Day Delay” notice as part of a campaign coordinated with the Securities Industry and Financial Markets Association, the industry’s major trade group.
“In response to last week’s activity, the [government relations] team partnered with SIFMA to quickly develop a portal that enables you to engage in this comment period and ensure that our views on this issue are heard,” Andy Kalbaugh, LPL’s divisional sales director, wrote, referring to last Thursday’s publication by the DOL of its request for comment.
He directed brokers to a webpage with this suggested comment language: “As a licensed financial professional serving the retirement and investment needs of my clients, I ask you to take the necessary steps to finalize the 60-day delay of the Department of Labor fiduciary rule….With so much at stake for investors, I strongly encourage our policymakers to finalize this proposed 60-day delay so that we can all take the necessary time and work towards the best resolution possible.”
As of Wednesday morning, not quite a week after the proposal was published in the Federal Register, the DOL had posted 215 comments. While commenters identifying themselves as advisors are decidedly in favor of a delay, consumer groups and some registered investment advisors and robo-advisors urged implementation on the original April 10 date and warded off suggestions that the industry needs more time.
“We believe that any delay would needlessly perpetuate conflicted advice at investors’ expense,” wrote Jon Stein, founder and chief executive of Betterment, a broker-dealer that sells “robo” management services directly to investors and through RIAs.
Ladenburg Thalmann Financial Services, an independent broker-dealer in Miami, Fla., said sticking to the original date will hurt investors because the asset-management industry is not ready with DOL rule-compliant products to offer clients on its platform.
“Ladenburg will be forced to significantly reduce retirement products available to investors,” Doug Baxley, vice president of retirement and fiduciary services, wrote. “This is because product sponsors simply have not had the time necessary to modify their products to meet this requirement.”
Scott Eichler, an RIA at Newport Wealth Advisors in Newport Beach, Calif. that also offers brokerage products through Centaurus Financial, Inc., went further in his personalized comment. “My job entails squeezing every drop of return I possibly can from the risk tolerance that the family [sic] I am serving will accept. To that end, the more tools I have, the more needs I can serve….I would implore the DOL to delay this implementation date.”
While the letter-writing campaign is aimed at the near-term start debate, some commenters also flicked at the more fundamental review of the rule’s costs and benefits that President Trump last month ordered the Labor Department to undertake.
“Looking beyond the delay of the applicability date, we urge the Department to maintain strong protections to ensure that all Americans have access to unconflicted investment advice,” Christopher Jones, chief investment officer of Financial Engines wrote in support of moving ahead with the current dates. The California-based RIA manages about $138 billion in employee retirement assets through 401(k) and other programs.
Bart Naylor, a financial policy advocate at Public Citizen, said his organization plans to work with other consumer groups to encourage members to comment.
The comment period extends until March 17. If the DOL proceeds with its conflict-of-interest rule implementation delay, firms will not be required to abide by it until June 9. The DOL is concurrently proceeding with a 60-day comment period on whether it should go further and modify or eliminate the rule.