Fiduciary standard bill passed by House panel

"Our big concern is not the SEC fiduciary standard proposal, but the DOL proposal," the lobbyist said.

The lobbyists cite the letter sent this week by 32 House Democrats — including 29 members of the Congressional Black Caucus—to the DOL voicing concern about the re-proposal.

"…we have concerns that the department's re-proposal could severely limit access to low-cost investment advice," the letter said.

As for the Wagner bill, Jill Hoffman, assistant vice president at the National Association of Insurance and Financial Advisors, said the language in that bill would force the SEC "to demonstrate that consumers are being systematically harmed or economically disadvantaged by the current standards," before promulgating a uniform fiduciary standard rule.

Moreover, if that harm is found, Hoffman said, then the SEC must first look at alternatives (such as modifying disclosures) before proceeding with a new rule.

The language also restricts the DOL from moving forward on their rule by saying that the SEC would have to go first.

"NAIFA agrees that if the SEC is going to proceed on a rule, then they should demonstrate how the rule will resolve any harm to consumers, and that they should go before the DOL," Hoffman said.

NAIFA President Rob Smith reiterated that NAIFA supports the intent of the Wagner bill, but not the substance.

He also said that NAIFA is concentrating on comments it plans to submit next week on the SEC's request for economic data on the proposed fiduciary rule.

 He said that in its comments, NAIFA will say that it appreciates the SEC's responsible, deliberate approach to rule making by conducting a cost-benefit analysis prior to considering whether to propose a uniform fiduciary standard or harmonized set of rules for broker-dealers and investment advisers."

He said NAIFA plans to file comments to the SEC next week, recommending that the SEC should not take any action that would have the unintended effects of increasing costs or limiting access to financial advice for middle market investors.

"Any proposal should also preserve the business model of broker/dealers and their registered representatives, which currently serves many middle-market consumers who might otherwise not have access to professional advice and service," Smith said that NAIFA will say in its comments.

Fi360's Thompson said it is unlikely that the SEC will publish a rule implementing a uniform fiduciary standard this year, but that such a rule could be published for comment early next year.

However, he said, it is likely that the DOL will publish its rule for comment by the fall.

The FSC acted on the Wagner bill despite concerns voiced by Rep. Maxine Waters, D-Calif., ranking minority member of the committee.

"This appears to be yet another attempt to bog the SEC down to the point where they're unable to put forward a rulemaking – even a rulemaking related to the crucial issue of protecting the hard earned retirement savings of millions of American families," Waters said during debate on the measure.

"I am sympathetic to the desire to require coordination between the Department of Labor and the SEC so that investors, no matter who they are, can rely on one strong standard of care, no matter who is giving them advice," Waters said.

"However, the bill also puts in additional redundant cost-benefit analyses that will only slow down this important rulemaking, and possibly tie up a final rule in years of court litigation," Waters said.

Earlier, new SEC chairwoman Mary Jo White said the bill, if enacted, "would make it difficult" for the agency to craft a rule imposing a uniform fiduciary standard.