ORLANDO, Fla. The Department of Labor is pushing its fiduciary proposal hard and some industry players say it's going too fast.
"[The DOL] has announced that it will give the industry essentially eight months to implement the proposal," says David Bellaire, executive VP and general counsel at the Financial Service Institute, at Pershing's Insite 2015 conference. "Eight months is not chosen randomly," he says, explaining that this will give the Obama administration time to put the standard in place before a new administration gets elected.
"It's important for the Department of Labor and the Obama administration to get this fully implemented so a new admiration can't undo their work easily," Bellaire said. "That means they will only have a couple months to analyze all the comments. I would suspect that there will be thousands of comment letters."
In addition to the DoL needing time to react to comment letters, Tonia Bottoms, director and managing counsel at Pershing, notes that there are still questions that need to be answered by the group.
"There are over 100 places in the [proposed] rule where they are asking for industry input," she says. "Where they ask about a function or should they ask for additional information."
She criticizes the proposal further by saying that the DoL will limit the products available for advisors. She notes that alternative investments will not be listed as applicable investments under the proposal.
To be sure, there are other critics of the DoL plan. SIFMA, for its part, floated its own fiduciary proposal that would be overseen by the SEC and shift the main focus to disclosure of fees and conflicts of interest.
"The current proposal [by the Labor Department of Labor] contains so many exceptions that our members think it is unworkable," says Ken Bentsen, CEO of SIFMA, who spoke on Wednesday at a fiduciary conference hosted by the organization.
The Department's proposed rule would affect advisors or brokers receiving compensation for providing investment advice to a retirement plan sponsor, plan participant or IRA owner.
Bottoms argues that the proposal is not ready to be put into practice and called upon advisors in the audience to bring up their concerns directly with the DoL. Bellaire agrees and says that the "fast track" pace by which the DoL is turning this proposal into practice will likely leave no room for changes.
"It's moving forward and it's moving forward rapidly," he says. "There is a small window to impact it and now is the time to engage." The DoL has said it will open up a comment period following public hearings that will begin on Aug. 10.
He goes on to say that the Obama administration and the American people are supportive of the proposal because of the distaste for Wall Street since 2008.
"The American public see [advisors] as a punching bag they want to see hit repeatedly," he says. "This is on a freight train headed for implementation."