The trade groups include the Insured Retirement Institute (IRI), the Investment Company Institute (ICI), the National Association of Insurance and Financial Advisors (NAIFA), the Securities Industry and Financial Markets Association (SIFMA) and the U.S. Chamber of Commerce.
The associations said they are also “quite concerned that many small firms may have been less aware of the December 20 expiration of the temporary enforcement policy than larger firms. For the larger firms, this has been an ongoing effort that in many cases began months ago by devoting substantial resources toward compliance. Such resources are not readily available to small firms,” the trade groups added.
Reish said he has heard that some smaller and midsize firms are struggling and didn’t realize the rule applied to them or did not realize how labor-intensive and burdensome implementation would be.
The resource disadvantages that some smaller firms face may leave them with no choice but to reject fiduciary status, the trade groups said.
“This could potentially create an unlevel playing field between retirement investors who utilize large firms versus small firms as their advisors,” they added.
The trade groups said they are hearing from firms hesitant to either accept fiduciary status or firm up new procedures until they have some idea about how the DOL plans to modify or enhance the rule.
“The timing of any new proposals or guidance by [the Employee Benefits Security Administration] creates significant uncertainty and challenges for industry,” the trade group letter said. “It means stakeholders are dealing with what might be described as a ‘moving target,’ which causes confusion and substantial cost.”
Firms have already worked extensively to comply with Regulation Best Interest and are working “feverishly to comply with the DOL rule, but in light of all the changes in this area during the last five years, some firms are hesitant to adopt material new changes that may need to be revisited again soon,” the groups said.
Work schedules are also stretched thin by the burdens of ensuring workforce safety in light of the new Covid variants, the groups said.
Consumers would continue to be protected by existing DOL rules for as long as the temporary non-enforcement policy remains in effect, including the requirement that fiduciaries work “diligently and in good faith” to comply with impartial conduct standards, the trade groups added.