Compliance June 9, 2017

ICI, FSI Applaud Passage of Financial CHOICE Act

On Thursday, the House of Representatives passed a bill that would undo much of the Dodd-Frank Act’s regulations and the fiduciary rule.
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The Investment Company Institute (ICI) and the Financial Services Institute (FSI) both issued statements applauding the U.S. House of Representatives’ passage on Thursday of the Financial CHOICE [Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs] Act of 2017. The bill is considered to be the first real step toward Congressional repeal of Dodd-Frank regulations and the Department of Labor (DOL) fiduciary rule.

In the ICI statement, the institute’s president and CEO, Paul Schott Stevens, said, “[The vote] brings us one step closer to enhancing investment and economic growth by eliminating inappropriate and overly burdensome regulation affecting our capital markets. ICI strongly supports removing the power of the Financial Stability Oversight Council to designate non-bank entities as systemically important financial institutions [SIFIs]. Left unaddressed, this flawed process could designate registered funds as SIFIs and subject them to regulation by the Federal Reserve.”

Schott Stevens also said he was relieved to see that mutual funds would not be subjected to stress testing.

For its part, the FSI said the bill will allow investors to continue to have access to and choice among financial advisers. FSI President and CEO Dale Brown said, “The passage of the Financial CHOICE Act is a critical win for Main Street Americans who rely on affordable, objective advice to achieve their financial goals.”

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Client Service June 9, 2017

PSNC 2017: Plan Sponsors Face an Exciting and Challenging Future

Today, still only 23% of retired people draw a major portion of their income from DC plans; this figure will increase dramatically in the next 10 years as the other sources of income fade.
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Aging populations and work forces are placing an increased strain on the federal, public and private retirement systems, warned Joe Ready, executive vice president and director of Wells Fargo Institutional Retirement and Trust, addressing the 2017 PLANSPONSOR National Conference, in Washington, D.C.

“We all have been living for some time in a world of consumer direction, but this is finally having an impact in the retirement space,” he said.

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“Now that the retirement world has shifted from a defined benefit [DB] approach to defined contribution [DC], we all have more responsibility than ever before to provide for our own retirement. It is an enormous responsibility that we have foisted onto individuals who really have little preparedness,” he said. “Anyone who is responsible for building and running plans must be tuned into the rapid pace of change, which has only increased and will only increase.”

Ready noted that, today, still only 23% of retired people draw a major portion of their income from DC plans. He shared research data suggesting that this figure will increase dramatically in the next 10 years as other sources of income fade.

“By the year 2020, it is projected that total retirement plan assets saved by individuals will be $24 trillion,” he observed. “If you dig into that, $18 trillion will be wholly self-directed assets. That’s what I am talking about when I mention ‘consumer-directed retirement.’ It is particularly informative to compare this number with the $2.8 trillion in the Social Security Trust Fund today. People are going to be mostly responsible on their own for funding their retirement.”

Ready posited that a confluence of legislation, social forces, regulation and technological development are fundamentally changing the character of the retirement planning market, adding that “the plan sponsors, advisers and providers in the room today can have a big influence on all of this, making sure change is positive rather than negative.

“Anything that improves access to workplace retirement savings plans and influences people to save more for their future—we must support this,” he urged PSNC attendees. “On the flip side, we need to protect our industry from negative aspects of tax reform. We need to continue to use our collective voice to stand up for what is right for our industry and our participants.”

Ready concluded, many of today’s retirement planning challenges can be “addressed and even solved through what I call ‘technology with a purpose.’ We need to be creating and implementing highly targeted and efficient communications and solutions that are very aggressive in helping participants get on the right track. We need to make retirement planning simpler, more targeted, timelier and more relevant for all workers.”

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