The coalition also asked the Assistant Secretary for a revision that would require firms and investment professionals to provide ongoing monitoring services of customers’ investments. There is currently no such requirement if the advice can be deemed non-discretionary.
“For far too long, brokers have been carved out of the definition of who is an ERISA fiduciary and as a result, retirement investors receive conflicted advice that corrodes their financial security with excessive fees, expenses, and risks,” co-signor Michael Edmiston, President of PIABA, said in a statement.
The coalition cited a study by Harvard and New York University researchers that found that broker commissions and incentives are the biggest driver in determining what products are sold. In other words, the more a rep is paid to sell a product, the more likely pricey, commission-laden products such as annuities are sold, the group said.
Before the DOL’s now-defunct 2016 fiduciary rule was overturned in court, “annuity sales flows became twice as sensitive to expenses as before the rule and the sale of annuities in the top quartile fell by 52%,” the study found.