(401KSpecialist) - The bottom line with Department of Labor’s controversial fiduciary rule, currently under review at the White House Office of Management and Budget, is that it seeks to level the playing field to protect retirement investors.
That’s what Lisa Gomez, the Department of Labor Assistant Secretary for EBSA, told attendees during the opening general session at the 2024 NAPA 401(k) Summit in Nashville on Sunday.
“We’re trying to the extent possible to make this not so difficult and to draw upon what works for everyone so we can have just one level playing field,” Gomez said in a sit-down interview with American Retirement Association CEO Brian Graff. “How can we best do that so that we can end up at the other side in a better place where people know what’s expected of them and people know what to expect of investment advisors?”
Graff reaffirmed that ARA supports the goal of making sure everyone providing advice to retirement plan sponsors have that same responsibility as advisors providing information to individuals.
“We certainly agree with the importance of fiduciaries helping plan fiduciaries with those investment options,” Graff said. “A point that as an organization NAPA has made repeatedly is the fact that with respect to individual wealth management advice given at that level, you do have Reg. B.I., you do have the NAIC model rule, but none of those apply to the advice given to the plan sponsor.”
The latest iteration of the DOL rule, which it is calling the “Retirement Security Rule,” seeks to do just that.
“We are very focused on trying to come out with a rule that takes into account the differences as far as what the landscape looks like and protects retirement investors from harmful conflicts of interest that can come up when they are getting investment advice,” Gomez said.
She said during Sunday’s session that she is well aware that many people, including organizations and some lawmakers, are not happy with the rule and have called for it to be withdrawn. She knows legal challenges are coming. But before they do, she asked people to do one thing.
“Please read the rule before you make judgment on the rule,” Gomez said. “I’m sure they’ll be complaints filed in record time. There is sadly so much misinformation. Just get the facts. If you don’t like the facts, you’re perfectly entitled to not like the facts as we’ve written them, but at least know what you’re complaining about.”
“At the end of the day, we just want there to be protection for plan participants,” Gomez concluded.
Beyond the fiduciary rule, Graff and Gomez also talked about the DOL’s ESG rule, and how it is often misunderstood.
“This is a rule where the government is telling you we are going to get out of your way,” Gomez said.
She said the rule, at its core, tells plan fiduciaries that while they may consider environmental, social and governance factors in investing, above all, they can never put any of these considerations above the best interest of participants in the plan.
“There’s been a lot of misunderstanding that we’re requiring people to consider ESG, and that’s not true,” Gomez said. “This is a rule where we are taking our thumb off the scale. It’s the government telling you we are going to get out of your way.”
By Brian Anderson - Editor-in-Chief
April 8, 2024
