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September 04, 2020 at 04:36 AM
Officials at the Employee Benefits Security Administration (EBSA) clearly think they have heard from all of the usual investment advice standards interest groups about 5,000 times too often.
They struggled to squeeze all remaining public discussion of their new 401(k) plan rollover standards draft into one day of testimony, held Thursday. Phyllis Borzi, a former EBSA head, called the hearing “rushed and unfair.”
Resources
- Links to resources related to the rollover standards proposal hearing are available here.
- An article about Phyllis Borzi and other commenters who spoke at the hearing is available here.
But representatives for life insurance industry groups and life insurance companies did their best to persuade EBSA officials to sand off what the life industry speakers see as warts on a beautiful work of regulatory art.
The Background
EBSA — the arm of the U.S. Department of Labor that’s in charge of health and retirement benefits regulations — has developed the new rollover standards proposal in an effort to replace the fiduciary rule regulations that DOL developed during the administration of former President Barack Obama. The standards died when the administration of President Donald Trump declined to defend the standards in court.
EBSA has tried to develop a standard that’s compatible with the U.S. Securities and Exchange Commission’s new Regulation Best Interest standard, and with the National Association of Insurance Commissioners’ effort to develop an annuity sales standard update that would be compatible with Regulation BI.
EBSA has applied its standard proposal to transactions involving rollovers, or moves of assets from 401(k) plans and other retirement plans governed by the Employee Retirement Income Security Act of 1974 (ERISA) to other types of investment arrangements, such as individual retirement accounts or individual annuities.
Life insurers have supported Regulation BI and the NAIC model update, seeing those efforts as being much less hostile toward annuities and sales commissions than the old DOL regulation
Steven Saxon and Jon Breyfogle, who said they spoke for many retirement services providers, have emphasized how much their clients like the EBSA rollover standards proposal.
The New Life Industry Points
But Saxon, Breyfogle and other life industry speakers did have plenty of tweaks to suggest.
Here’s a look at some of the points life speakers made.
James Szostek, a representative from the American Council of Life Insurers, said EBSA officials have mistakenly assumed that any compensation for financial professionals involved in rollover transactions is a fee for investment advice.
