NEW YORK, April 30 (Reuters) — The retirement planning industry is asking once again for leniency from federal fee disclosure regulations that take effect July 1.
The American Society of Pension Professionals and Actuaries sent a letter to the U.S. Labor Department on Monday requesting a one-year transition period by which the agency would allow for "good faith efforts" by the service providers to comply with the regulations.
The Securities Industry and Financial Markets Association, the brokerage industry trade group, sent the department a similar letter on April 16.
The two groups, which represent thousands of financial advisers, are worried that even though the rule takes effect in 60 days, there are a lot of unknowns about the details, officials said.
The SPARK Institute, the trade group for retirement plan administrators, sent the Labor Department a similar letter in March. The American Bankers Association has also asked for a one-year transition period in conversations, said Tim Keehan, vice president and senior counsel of the ABA.
This is not the first time the industry is pushing back on the fee disclosure rules.
The Labor Department issued the current rule in July 2010 and gave providers 12 months to comply. After industry opposition, the department extended the deadline to April 2012. The final rule was released in February.
Under the rule, starting in July service providers will have to disclose all of their fees to retirement plan sponsors. In August, retirement plan sponsors will have to disclose their fees to plan participants.
Retirement plan advisers worry the rules require advisers to disclose historical performance and fees for model portfolios, which are customized managed accounts designed for specific plans.
The way the rules are written, it is unclear whether it is sufficient to just disclose the performance and fees of the funds that make up these model portfolios, said Craig Hoffman, general counsel of ASPPA. Trying to disclose the performance and fees of the actual model portfolios is "expensive and problematic," he said.
ASPPA's members have voiced concerns that regulators could construe the historical investment performance of their model portfolios "as misleading advertising," Hoffman said.
A one year "good faith transition period," would allow firms to try to comply with the new regulations with the promises that the agency will have "an understanding of the ambiguities present and take that into account," Hoffman said.
The agency could still enforce against poor practices, but any enforcement action "would be tempered with a more liberal application," he said.
A Labor Department spokesman declined to comment.
© 2011 Thomson Reuters. Click for Restrictions.
Register or login for access to this item and much more
All Employee Benefit News content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access