Fiduciary concerns ranked high on the list of hot topics at this week’s American Society of Pension Professionals and Actuaries annual summit in Las Vegas, Nevada.
The Department of Labor held hearings last week on its proposal to modify the definition of the term "fiduciary" under ERISA, essentially broadening the definition. The Securities and Exchange Commission, meanwhile, released a staff report in January recommending a uniform fiduciary standard for broker-dealers and investment advisers.
"There’s a lot of marketplace confusion over the issue," said Brian Graff, executive director and CEO of ASPPA, at the summit. "This [DOL] regulation has come under a great deal of criticism."
He suggested "we level the playing field so the world would be two camps. People who are currently ERISA fiduciaries and want to be, and people who aren’t, don’t want to be, and they have to disclose that. To us it’s a nice, simple, clear paradigm that hopefully wouldn’t upset the apple cart too tremendously."
The SEC is a long way from coming out with regulations believes Greg Dean, counsel for the Senate Committee on Health, Education, Labor and Pensions. "We have two different regulatory regimes and they’re colliding," he noted. "The securities regime is more disclosure focused, while the ERISA regime is more fiduciary-focused."
In a separate session on legal updates and best practices for adapting to new legislation and regulations, lawyer Fred Reish told participants he thinks "all of this stuff means that if you’re an adviser, you’re going to very clearly have to be a fiduciary or not be a fiduciary. A lot more clarity is going to come. People are going to have to work a lot harder not to be one, than to be one."
He recommended that brokers "work to get all of your plans on level compensation. That you make no more money regardless of the investments you recommend. Conflicts of interest are becoming a huge issue. You may be positioning yourself to be in the right place in the future no matter what happens."
