Fiduciary Rule Review Gets Mixed Reaction in Plan Sponsor World

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Sean Forbes

The retirement plan advice industry has already made changes with the times, so large employers appear to be largely unconcerned with President Donald Trump's decision to review the Department of Labor's fiduciary rule.

“What I think this means is an opportunity to comment, take stock, take a second look at it, to be sure it’s more collaborative in approach,” Lynn Dudley, senior vice president for global retirement and compensation policy at the Washington-based American Benefits Council told Bloomberg BNA Feb. 3.

However, the picture is a bit muddier with small employers. Some had expressed concerns that the rule would raise costs and therefore hinder their ability to provide plans.

“So it sounds like ancient history now, but it’s time for the rule to be revisited,” Randy Johnson, senior vice president for labor, immigration and employee benefits with the U.S. Chamber of Commerce, told Bloomberg BNA Feb. 3.

Trump made the move in a memorandum Feb. 3, directing the DOL to conduct an updated economic and legal analysis.

“The rule is a solution in search of a problem,” White House press secretary Sean Spicer told reporters. “There are better ways to protect investors, and the Trump administration is taking action to do so.”

Spicer said “the rule’s intent may be to have provided retirees and others with better financial advice” but that “in reality, its effect has been to limit the financial services that are available to them.”

Impact on Large Employers

The development of the rule has already made large employers more sensitive to the line between investment education and advice, and that’s not likely to change no matter what happens to the regulation, Dudley said.

“So I don’t think necessarily they would change those things,” she said. Many large employers have looked at their agreements with service providers and decided that they want a provider that accepts fiduciary responsibility, she said. They wouldn’t “rip up” what they’ve developed, she said.

When the rule was still percolating through the proposal process, large employer plan sponsors had worried that it would “endanger innocent conversation among employees” if general talk about investments or finances were ultimately considered advice, Annette Guarisco Fildes, president and chief executive officer of the ERISA Industry Committee in Washington, told Bloomberg BNA Feb. 3.

But the DOL addressed those concerns, so large plan sponsors don’t have many remaining significant concerns about the rule, Guarisco Fildes said. However, a reappraisal of the rule could destabilize matters about offering plans, she said. “We’re certainly hoping that in the review that they don’t create uncertainty for large plan sponsors,” she said.

Small Businesses Clash

The U.S. Chamber of Commerce has been waging battle over the rule since the DOL proposed it in 2010 and had eagerly anticipated Trump’s action. Several of the Chamber’s small business members told the DOL in comment letters during the proposal phase that the rule would harm their ability to offer retirement plans to their employees, Johnson said.

The Chamber also spearheaded a lawsuit against the DOL on the rule, and that is pending in a federal court in Texas. A ruling in that case is expected as early as next week.

However, a group that represents small businesses, the Small Business Majority, likes the protections the rule provides.

John Arensmeyer, chief executive officer of the group, in San Francisco, told Bloomberg BNA Feb. 3 that he considers the rule a vital protection for small business owners and their employees. “It’s a no-brainer that small business owners would want their financial advisers to assume fiduciary responsibility,” he said. “We don’t understand why there would be any reasonable objection to this kind of protection.”

To contact the reporter on this story: Sean Forbes in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

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