DOL Fiduciary News: November 29, 2017
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Day after DOL delay, SEC's Jay Clayton calls a fiduciary rule a priority
InvestmentNews; Nov 28, 2017 @ 2:23 pm
In light of the Department of Labor's decision Monday to delay the full implementation of the fiduciary rule for retirement accounts, the Securities and Exchange Commission will make a fiduciary standard for brokers a priority, according to SEC Chairman Jay Clayton.
"I think I've been clear, we are working on a fiduciary rule and exploring it for brokers and investment advisers," said Mr. Clayton Tuesday morning on the sidelines of the Managed Funds Association meeting in New York. "It's a priority for me to address this space in light of the action that the Department of Labor took to step into this space."
"I think we belong in this space," he said. "And we should try and produce a rule, that, when investors see it, they are happy with."
Mr. Clayton's comments come the day after the DOL released a final rule that would delay implementation of its enforcement mechanism until the middle of 2019.
The rule would postpone from Jan. 1, 2018, to July 1, 2019, the applicability of a legally binding contract between brokers and retirement-account clients that requires brokers to act in their best interests, among other disclosure provisions and prohibited-transaction exemptions being pushed back.
401(k) managed account push rife with conflicts of interest
InvestmentNews; Nov 28, 2017 @ 5:30 pm
Record keepers are looking to managed accounts to be their next 401(k) cash cow, but the way some firms are promoting the products to investors is rife with conflicts.
Several providers, including Nationwide, Voya Financial and ICMA-RC, offer incentive compensation to their advisers and representatives for getting plan participants to enroll in their paid managed account services.
The practice spans not just 401(k) plans, but also 403(b) and 457 plans, which are defined-contribution plans for nonprofit and governmental institutions. Some retirement industry observers say it puts representatives' economic benefit ahead of participants' interests.
"It seems like this is the dirty little secret of the managed account industry," said Scott Dauenhauer, principal at Meridian Wealth Management, of incentive compensation. "At the most basic level, you have a situation where someone is being incentivized to push a product and the participant and plan sponsor aren't aware of it. And that's just wrong."