The Financial Services Institute is circulating a fact sheet to lawmakers to help explain how the Department of Labor's fiduciary redraft is "unworkable."
FSI, noting that it has supported a uniform fiduciary standard, uses each letter in "unworkable" to explain the current redraft's faults.
The document — which FSI says has been well received on Capitol Hill — is a precursor to FSI's "heavily detailed" comment letter that the independent broker-dealer trade group plans to submit to DOL in the coming weeks. The deadline for comments is July 21.
Dennis Kelleher, president and CEO of Better Markets, countered that "contrary to FSI's claims, the only thing 'unworkable' is a business model that puts brokers first and their clients second. That's wrong, and that's why America's most prominent retiree, labor, consumer and financial reform advocacy groups are fighting for the DOL's client first rule and why the industry will say and do anything to stop it. Americans deserve better. Their best interests should come first."
FSI's document argues that DOL's redraft is U.N.W.O.R.K.A.B.L.E. as follows:
Uniform fiduciary standard is supported by FSI: plan includes so many complex and costly requirements, it makes the fiduciary standard unworkable;
Not a business model neutral proposal: as currently written the redraft does not contemplate any currently existing broker-dealer business model.
Wrap accounts are what clients would be steered toward: fee-based accounts may end up being more expensive than a client's current arrangement — especially in the case of lower net-worth clients. Thus, advisors may steer clients towards fee based/wrap accounts to "levelize" their revenue streams in response to the proposal.
