SIFMA isn't promising a lawsuit to challenge the Department of Labor's controversial fiduciary rules, but the Wall Street trade group isn't ruling it out, either.
On a conference call with reporters, SIFMA President and CEO Ken Bentsen said his group and its member firms are still digesting the "quite voluminous rule," which will require advisors working with retirement plans and savers to act as fiduciaries and provide advice that is in their clients' best interest.
Asked about a widely expected legal challenge to overturn the rule, Bentsen said that it would be "premature" to speculate whether SIFMA might take the fight to court.
"We're trying to understand what's in the rule right now," he said.
"As best as we can tell at this point in time," he said, the rule "is going to have a big operational lift for firms."
Bentsen and other SIFMA officials acknowledged that the DoL had modified its original proposal, addressing some of the industry's concerns in the final version, released last week. But the extent that those changes will make the rule more palatable to a hostile industry is unclear.
"Where obviously there were some changes made, there's still serious levels of interpretation as to what those changes are and how they would work," Bentsen said.
But the group reiterated one of the enduring lines of criticism that has been a refrain of opponents of the rule throughout the long-running debate.
"We still have concerns about the potential negative consequences of this rule for investors in terms of choice and cost, and it will be some time before we or others, I think, will really completely understand," Bentsen said. "One thing we can say for sure is that this rule remains exceedingly prescriptive, and will probably be subject to interpretation for a great period of time well beyond the time that it becomes fully implemented."
Among the DoL's key changes were a delay in that implementation date and a number of clarifying tweaks, including a provision specifically allowing for the sale of proprietary products and modifications of the so-called best interest contract exemption, which would require covered advisors to enter into a contract with clients when providing conflicted advice.
Lisa Bleier, SIFMA's managing director and associate general counsel, said that her group welcomes some of the changes -- in particular the extended compliance deadline -- but reiterated the concern that the DoL's BIC exemption is poised to become an essential ingredient of serving the retirement market, and advisors will need to determine whether and how they can incorporate it into their practice.
"They want all of those conversations, all of those interactions, to occur as much as they can, within that new contract," Bleier said of the authors of the Labor Department's rule. "Each individual firm is going to have to take a look at whether those changes are sufficient enough to allow them to follow and create a contract that they can work within."