NEW ORLEANS | Mon., Mar. 19, 2012 5:35pm EDT (Reuters) - The Department of Labor is not going to let push-back from the financial services industry delay its fiduciary rule for advisers who handle retirement plans — but that does not mean the regulation will be out anytime soon.
DOL withdrew its original proposal after industry groups and members of Congress criticized the agency for not proving that the benefits of making advisers who work with 401(k) plans more accountable for the advice they provide outweighed the costs. Agency officials originally expected the new rule to be released early this year.
In December, the agency sent out a request to industry groups asking for data from their members about customer accounts — some dating back 10 years. The groups criticized the request as extreme and impossible to fulfill. Since then, DOL has extended data collection period twice, but to no avail.
"I am not aware of any concrete data that they have received from financial services firms," Brian Graff, CEO of the American Society of Pension Professionals and Actuaries, said in an interview with Reuters at the organization's annual 401(k) conference in New Orleans.
Industry groups say they cannot provide much of the information the agency requested because their members do not have it in the format the agency wants, if they have it at all. But that is not stopping the agency's plan to push through the proposal.
"We had hoped data from the industry would supplement our efforts," said Michael Davis, deputy assistant secretary of DOL’s Employee Benefits Security Administration. "But we will get the rule out irrespective of having their data." The Labor Department is relying on academic data as well as other outside analysis to prove the benefits of the rule outweigh the costs, Davis said.
When asked if the agency would have the rule out before the presidential election, Davis, who spoke at the conference, declined to comment. He also would not comment on whether a delay in the Securities and Exchange Commission's plans to propose a regulation requiring all advisers to meet a fiduciary standard would affect the timing of a DOL rule.
In February, the SEC said it was drafting a request to ask the public for more data for a cost-benefit analysis of its proposal.
Davis also indicated that DOL is not backing down from its pledge to include Individual Retirement Accounts under the rule. That aspect of the original proposed rule has caused consternation among financial advisers who work with 401(k) plans.
Advisers say they worry the rule would restrict how they are compensated for rolling employees' accounts into IRAs when they retire or leave a company.
In a Q&A session at the conference on Monday morning, he told attendees the agency will outline certain scenarios where they can still be compensated and work with IRAs.
"That was a significant point," said Marcie Supovitz, a principal with Boulay Donnelly & Supovitz Consulting Group Inc and president of the National Association of Plan Advisors.
Separately, Davis said the Labor Department will send out answers in the next few weeks to frequently asked questions about its rule on 401(k) plan fee disclosure, which takes effect this summer. That is welcome news for advisers, mutual fund companies and record keepers that work with 401(k) plans.
"We don't always do this," Davis said.
One issue that will be clarified is how providers should explain the costs and performance of model portfolios — managed accounts made up of different mutual funds that firms often customize to the needs of an employer. As it is written in the rule, providers would have to disclose these different fee arrangements for each plan they serve, which is not practical, Supovitz said.
Davis declined to say what else will be clarified.
(Editing by Jennifer Merritt and Andre Grenon)
© 2011 Thomson Reuters. Click for Restrictions.
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