Industry leaders are doubling down on criticism of the Labor Department's proposed fiduciary rule, questioning even if authorities fully understand the rule's likely impact.
Meanwhile, the Labor Department says it has taken comments from opponents and proponents to heart. Amendments to the proposed rule, which affects advisors providing certain retirement advice, are being considered, Labor says.
Raymond James CEO Paul Reilly, speaking with analysts on Thursday, said that even with changes, he remains concerned that Labor Department officials may not realize how negative the rule's impact could be.
"They don't work in the securities business," Reilly said. "Do they really understand the impact it will have?"
When asked to respond to the criticism, Secretary of Labor Thomas Perez said members of his staff are quite familiar with the corporate world. He pointed to Judy Mares, deputy assistant secretary, who was standing with him, who served as president of a financial consulting service and chief investment officer for Alliant Techsystems and Ameritech.
Perez, who was speaking at an unrelated press event in New York, also said that the Labor Department had extensively engaged and listened to the concerns, criticism and suggestions of industry players, from CEOs to investor advocates. The Labor Department held two comment periods as well as four days of hearings in August.
"We had one of the longest comment periods we have [ever] had and that was almost 6 months of formal comment on top of a year and a half of informal outreach to stakeholders," he said.
"I've appreciated the outreach and I'm very comfortable with the competence of the team," Perez added.
The Labor Department has not set a release date for revisions to the rule, which has been a point of controversy for some time. During recent earnings calls, analysts have peppered CEOs with questions about the rule's possible impact on their firms' bottom line.
Reilly told analysts during Raymond James' earnings call that deadline for implementing the proposed rule may be too short.
Other firms have expressed similar concerns, during earnings calls and at industry events. Greg Fleming, president of Morgan Stanley Wealth Management, told attendees at a Money Management Institute conference in New York that his firm is getting ready for when the rule lands.
And he also repeated industry criticism that the rule will create pressure to end transactional relationships in favor of advisory relationships when providing advice on rollovers of retirement accounts.
Critics have charged that the proposed rule will make it too expensive and too difficult to work with many smaller accounts.
"In the final analysis, as currently configured, you'll likely end up with more clients not working with an advisor at all, which was not the original intent of anyone here," Fleming said.
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