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Proposed DOL Fiduciary Rule Guts Fiduciary Principles

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Knut Rostad article criticizes the DOL proposed fiduciary rule.

Article Originally Published: FinancialPlanning

The Department of Labor’s proposed fiduciary rule has been widely reported but not yet well critiqued. A good starting point in this effort can be found in a Wall Street Journal opinion piece written by Lori Chavez-DeRemer before she resigned as head of the agency earlier this month.

In it, she argues for an agency priority under President Donald Trump: decreasing regulatory burdens and lowering litigation risks for plan fiduciaries recommending alternative investments in 401(k)s. Chavez-DeRemer writes: “Our rule confirms that there is no investment class or strategy that is per se unlawful for retirement plans. That includes alternative investments, such as private equity … which could be used to diversify plan offerings.” 

Of course no class of investments is per se unlawful. But this isn’t the question. The question is whether alternatives are, as a rule, too costly, illiquid, opaque, risky and difficult to value to be safely included in workers’ retirement accounts. The answer is yes — and this is the central point that the DOL’s proposed rule fervently avoids by contorting logic, facts and common sense…

Read the full article here.

DOL Secretary of Labor WSJ article explains the proposed fiduciary rule.

Article Originally Published: WSJ

President Trump’s bold vision of a new golden age for America requires a retirement system that allows Americans to age with comfort and dignity. Before that can happen, we must unwind regulatory overreach and litigation abuse that have stifled innovation.

Today, the Labor Department takes a major step toward that new golden age. We have issued a notice of a proposed rulemaking on the selection of investment options for defined-contribution plans such as 401(k)s. Our rule confirms that there is no investment class or strategy that is per se unlawful for retirement plans. That includes alternative investments, such as private equity, which isn’t offered on public exchanges and could be used to diversify plan offerings…

Read the full article here.

Dan Moisand

 

Dan Moisand is a nationally recognized fiduciary fee-only financial planner, an Institute Real Fiduciary™ Advisor and Chair-elect of the CFP Board.

The Institute has enshrined the ‘Moisand Rule’ on fiduciary practices. It is basic and is more important today than ever: “You have to avoid conflicts. If I avoid a conflict, I don’t worry about it.”

Watch the video of Moisand speaking here.

Bob Veres

 

Bob Veres is a long term observer of financial planning. His Newsletter, “Inside information” Is a staple of leading planners. In the May edition he writes about fiduciary and the Institute.

"But a much bigger point is that the fiduciary standard—as Knut Rostad of the Institute for the Fiduciary Standard has pointed out—has been determined by the Supreme Court (1963 ruling) to be at the very heart of the Investment Advisers Act of 1940. It is the foundation of what it means to be an RIA registered with the SEC instead of a tipster or a tout."

- Bob Veres, Parting Thoughts ... The SEC's Own Compliance Culture