That model, the industry argues, isn’t economical with smaller accounts -- those with balances under $50,000. Those investors would likely be forced to handle savings on their own, sorting through options online without professional help.

“We don’t want to price modest-income people out of the market of getting advice,” said Tim Pawlenty, president of the Roundtable.

Undercover Probe

A 2011 study by the SEC’s staff, mandated by the Dodd-Frank law, noted “robust recent evidence that many retail investors do not understand or are confused by the different standards of care applicable to investment advisers and broker-dealers.” Outside of the Labor process, the SEC is also considering whether to have a fiduciary standard for brokers.

The Government Accountability Office last year decided to test how frequently salespeople for financial firms provide misleading advice. It had an investigator pose as a customer asking how to handle a 401(k) account after leaving his job.

After checking with 30 firms that administer the accounts, the GAO determined that investors were often given incomplete or incorrect guidance that steered them to convert their 401(k) into an IRA run by the same company, a move that could lead to higher fees and less protection. The report, released in April 2013, urged Labor to complete its fiduciary rule and require that brokers and other salespeople disclose conflicts of interest “in a clear, consistent and prominent manner.”

Lawmaker Letters

Borzi first published her plan in late 2010, about a year after she became Labor’s assistant secretary for the Employee Benefits Security Administration.

The backlash was swift. Wall Street’s biggest lobbying groups, including the Roundtable and Sifma, fanned out on Capitol Hill, asking Democrats and Republicans to send letters to Labor and the White House. They complained to lawmakers that Borzi had leapt into the fray without properly consulting with other regulators or the industry.

First « 1 2 3 4 5 6 7 8 » Next