Compliance September 19, 2011

Early Praise for EBSA’s Decision to Re-Propose Fiduciary Definition

Industry professionals, associations, and lawmakers are applauding the Labor Department’s decision to reevaluate its proposed changes to the definition of a fiduciary.
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Hours after the Employee Benefits Security Administration (EBSA) announced that it will be reissuing a proposal to update the definition of fiduciary, industry leaders began to express their approval (see “EBSA to Re-Propose Definition of Fiduciary Rule”).

Bradford Campbell, former head of EBSA from 2006 to 2009 and currently with Schiff Hardin LLP, said he is “very pleased” with today’s announcement.  “Rushing to a final rule would have been bad regulatory process, embroiling the Department in extensive litigation.  The bottom line is that DOL has not made the case for its original proposal.  The bipartisan calls to repropose the rule reflect this reality. The burden is on the Department to justify its efforts to fundamentally change the rules governing trillions of dollars of workers’ savings, and I applaud Assistant Secretary Borzi for her decision,” he said in a statement.

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The Securities Industry and Financial Markets Association (SIFMA) also issued a statement approving of EBSA’s action: “Since the beginning, we have raised significant concerns about the proposal and lack of cost-benefit analysis on a rule that would affect millions of IRA holders and plan participants. We appreciate the Department’s announcement that they indeed will conduct further economic analysis and make changes that will be included in the new proposed rule.”

The Financial Services Institute (FSI) saw the announcement as a victory: “The rule, as proposed, would have serious negative consequences for Main Street Americans in need of retirement advice. This is a major victory for… millions of hard-working Americans who need affordable, unbiased financial advice.”

Lawmakers also weighed in on the announcement. Senator Tom Harkin (D-Iowa), Chairman of the Senate Health, Education, Labor and Pensions Committee (HELP), and Representative George Miller (CA-7), Ranking Member of the House Education and Workforce Committee, applauded the decision to issue a new proposal as well, but also said the DoL must move forward: “[T]he simple fact is that bad investment advice threatens the retirement security of middle class Americans. The Department deserves a lot of credit for its efforts to hold advisers to the fiduciary standard Congress intended while taking into consideration the realities of a mature retirement industry. We urge the Department to move forward without delay on reproposal that will provide significantly increased protections for Americans concerned over their retirement security while being both practical and easy to manage.”

In its announcement, EBSA said a new proposal won’t be issued until 2012.   

Deals & People September 19, 2011

BofA Hires 180 Advisers in N.J.

Bank of America has hired 180 financial advisers to join the Merrill Edge wing of the banking giant.   
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The new hires bring the total number of Merrill Edge Financial Solutions Advisors (FSAs) in New Jersey to 320.  Last month, the bank hired 40 FSAs to work in the Mid-Atlantic region (see “BofA Hires Nearly 40 Advisers for Merrill Edge”).   

This news comes on the heels of BofA’s announcement that it will be laying off 30,000 employees as part of a $5 billion cost-cutting goal by the end of 2013; the lay-offs are part of “Project New BAC,” (so-named after the company’s ticker symbol), which also included the dismissal of Sallie Krawcheck (see “BofA Advisers Get New Boss in Management Shakeup”).

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BofA says Merrill Edge FSAs provide financial solutions and guidance to help “Preferred customers” manage their banking and investment needs and stay in better control of their finances. The bank plans to nearly double the number of FSAs nationally, to more than 1,000, by the end of 2011.

Bank of America said it is also working to enhance customer experience and satisfaction by:

  • Rolling out Platinum Privileges, which rewards customers who maintain $50,000 or more in deposit balances with Bank of America or investment balances with Merrill Edge with higher levels of service and comprehensive benefits across their banking and investing needs. Based on the success of a three-state pilot of Platinum Privileges that began early this year, Bank of America is beginning a national roll-out of Platinum Privileges, with expansion to New Jersey beginning this month.
  • Continuing to improve the Merrill Edge offering, including the introduction of a mobile application for iPad, iPhone and BlackBerry earlier this year, and the addition of 481 new no-transaction-fee (NTF) mutual funds.
  • Introducing specialty stores that provide in-person access to investment, small business and mortgage specialists and use technologies such as video conferencing.
  • Hiring 1,000 small business bankers in local communities to provide small business customers with local specialists to address their complex financial needs. Together with the 1,000 FSAs, this will create a 2,000-plus person team dedicated to the more complex needs of Preferred and Small Business customers.

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