DOL Continues Work on Fiduciary Rules, Guide for Fee Disclosures, Official Says


The Department of Labor is still gathering input and information to develop the highly anticipated reproposed rules that define a “fiduciary,” said Phyllis Borzi, assistant secretary for the Department of Labor's Employee Benefits Security Administration.

Borzi told Bloomberg BNA on May 5 that there is no set date to release the rules, which EBSA announced in September 2011 would be reproposed. The rule is expected to expand the meaning of “fiduciary” under the Employee Retirement Income Security Act to include individuals who represent a plan, participant or beneficiary and give investment advice for a direct or indirect fee.

The DOL has slowed its pace toward working to release the rules in order to accommodate more industry input, she said.

“We're not going to wait forever though,” she said.

DOL Secretary Thomas Perez will give the order on when to release the rules, Borzi said.

She spoke during a session at the Washington Legislative Update, a symposium event sponsored by the International Foundation of Employee Benefit Plans, which looks into the latest policy changes, including legislative influence on retirement plans and benefits. Borzi reviewed the creation of ERISA, and told attendees that it's time for the agency to return to core principles during its 40th anniversary.

“The retirement world is way too complicated,” Borzi said. And with defined benefit plans offering lump-sum payouts—which  Borzi called “a travesty”—more retirees may make decisions they may not understand.

Everyone today must act as his or her own financial adviser, she said, deliberating over details on when, with who and how much to invest into retirement savings vehicles. That's a growing issue in a nation where people would rather spend than save, she said.

And retirement savings issues may continue to be a struggle as more options, without lifetime annuities, become available and overwhelm the average consumer, who is often financially illiterate.

“They don't know what to do,” she said.

That's why one of the highest regulatory priorities is dealing with a conflict of interest in providing financial advice to individuals, Borzi said.

Anyone who provides information to individuals should be someone who that person can trust and an expert, she said.

“This seems fairly straight forward to me,” she said.

And Borzi said she assumes most people would agree to having an added level of accountability to a financial adviser's role. But she has encountered policy makers who say they don't care what is charged for the financial service.

“I have heard members of Congress say that to me,” she said.

Excerpted from a story that ran in Pension & Benefits Daily (5/5/2014).