"Debates over active or passive management, whether to consider past investment performance in the model, and similar matters should be decided by fiduciaries, not the government," he said. "Such unprecedented regulatory micromanagement of fiduciary decision-making would be dangerous, and not in the best interests of participants."
Said Johnston: "I find it frightening that the Labor Department...took upon themselves to consider and question the value of prior performance before releasing their proposed regulations."
Some say this provision opens up a Pandora's box of problems.
"The proposal is looking to hide past performance of individual funds, opening the door for every failed scheme and Madoff look-alike to get into IRAs and 401(k)s as long as the expenses are low," Harvey said. "This is crazy."
Confusion About IRAs
Another big area of debate and confusion concerns what advisors can and can't do when giving investment advice to IRA owners.
"Of particular importance is the impact the regulations are going to have on brokers who advise IRA rollovers, which is just about any broker who is serving wealth management clients," Trone said. "It seems that a vast majority of brokers will now have to become dually registered if they are going to advise either qualified pension plans or IRA rollovers." Dually registered advisors are registered both with the Financial Industry Regulatory Authority and the Securities and Exchange Commission.
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