This article originally appeared on FA Magazine by Tracey Longo.

A wide group of investor attorneys, investor advocacy groups and employee organizations told the Department of Labor yesterday in a letter that they “strongly oppose” the agency’s advice rule and believe it leaves retirement investors “dangerously exposed to conflicted advice.”

The letter, titled “How to Fix the Advice Rule,” was sent to DOL Acting Assistant Secretary Ali Khawar and asks for sweeping changes to the prohibited transaction exemption called “Improving Investment Advice for Workers & Retirees,” or PTE 2020-02, that the agency approved in February. The five-part exemption is designed to allow fiduciary advisors to accept commissions and other compensation normally prohibited to them without triggering ERISA violations.

“Research continues to show that investors still need regulatory protections that more effectively rein in conflicts of interest. Unfortunately, regulators at the Securities and Exchange Commission and in state insurance departments have thus far been unwilling to take consequential steps to rein in harmful incentives,” more than 40 groups and individuals, including the Consumer Federation of America, the Public Investors Arbitration Bar Association and long-time fiduciary advocate Ron A. Rhoades, director of the Personal Financial Planning Program at Western Kentucky University, wrote.

The groups are asking the DOL to make the following changes to the rule:

• Clarify the meaning of “best interest.”
• Close remaining loopholes in the definition of fiduciary investment advice.
• Strengthen the core duty of loyalty.
• Impose a duty to monitor on firms.
• Strengthen the disclosure requirements through testing and improved timing.
• Eliminate the self-correction provision for firms that discover violations and make investors whole.
• Strengthen advice rules with regard to IRA investors.

Read the full article on FA Magazine.