Today, the U.S. Department of Labor released the final version of its “Retirement Security Rule.” After an initial review of the fiduciary rulemaking package as detailed in the Fact Sheet, it appears that the Department failed to make any substantive or meaningful improvements to the proposed rule despite significant, specific, and data-supported feedback from industry stakeholders. As a result, financial services professionals face a new regulatory regime that imposes a blanket fiduciary threshold for recommending an annuity in a rollover transaction. Moreover, the DOL has largely left intact a constrained and practically unworkable PTE 84-24, a prohibited transaction exemption that has served both retirement savers and those giving financial advice for decades.
“Though disappointing, the release of this final rule is unsurprising,” said Chuck DiVencenzo, NAFA’s president and CEO. “It has been obvious from the outset that the DOL was intent on continuing its quest to push the regulatory boundary of IRAs past the original Congressional intent of The Employee Retirement Income Security Act of 1974 under false pretenses supported by back-of-the-napkin calculations.
“The process has been marred by a paucity of meaningful engagement between the DOL and industry stakeholders. Instead, the Department has dangerously rushed to put into effect a rule that disregards the value of independent distribution, the desire for Main Street savers to work with the professional service providers of their choosing, and the need for products that can provide predictable lifetime income. Ultimately, we anticipate more confusion, higher costs, and less financial security for low- and middle-income savers who need it most.”
NAFA has issued a press release in response to this reckless endeavor. Additionally, NAFA CEO Chuck DiVencenzo articulated his thoughts in an impact statement released on LinkedIn.
In the days ahead, NAFA will work in close partnership with its membership, industry trade association colleagues, and legal counsel to conduct a comprehensive analysis of the final rule. We will issue additional education and guidance in various formats, including through a summary guide and a deep-dive webinar of important rule provisions impacting independent distribution. Simultaneously, we will now pivot to all necessary and available avenues to fight this regulatory overreach.
Please continue to watch your inbox for updates and join NAFA in support of our ongoing education, advocacy, and integration efforts. The future of our products and our livelihoods depend on it.
