Kicking off a two-day online public hearing on the Labor Department's new fiduciary proposal, Lisa Gomez — assistant secretary of Labor for the Employee Benefits Security Administration — outlined Tuesday morning the new plan's multi-pronged goal.
The "chief aim" of the Retirement Security Rule: Definition of an Investment Advice Fiduciary, Gomez said during her opening remarks, "is to make sure that when individual retirement investors turn to investment professionals for sound advice rooted in their best interest, they get just that — advice that is prudent, loyal, candid and free from overcharges."
Since the Employee Retirement Income Security Act was enacted 50 years ago, "the challenges for investors have only grown as the complexity and range of investment products and practices have expanded, the conflicts of interest that have been presented to advisors have become more commonplace," Gomez said.
Also, "individual retirement investors have increasingly been called upon to make important investment decisions in 401(k) plans and IRAs that used to be made by professional money managers," she explained.
But Marc Cadin, CEO of Finseca, a group of financial professionals who sell life insurance and retirement planning products, said on an early Tuesday morning call with reporters that "there's no question that the latest iteration of the fiduciary rule proposed by the Department of Labor is offensively framed and is substantively bad."
At the core, Cadin said, the rule "is going to reduce access [to advice] for millions of Americans and it's going to harm their financial security. We think that the stakes have never been higher for the American people and we are more unified than at any time, I think, in the industry's history in opposition to this rule."
Taking Comments 'Very Seriously'
The two-day public hearing started Tuesday, and will continue Wednesday, Dec. 13. It may also be held on Thursday, Dec. 14, if needed, Labor has said.
More than 40 groups registered to testify. The comment period on Labor's proposal ends Jan. 2. Comments are already pouring in.
"We take your comments very seriously," Gomez said during her opening remarks. "And we have every expectation that the final rule will benefit from your thoughtful participation."
Rule's 'Basic Premises'
DOL's new fidciary proposal, Gomez said, "reflects a few basic premises."
First, "if you hold yourself out as an investment professional providing individualized investment recommendations to retirement investors that they can rely upon with trust and confidence as in their best interests you should be held to a best-interest standard," Gomez said.
