Advisers Compliant with Reg BI are Compliant with Fiduciary Rule, EBSA Says

Ali Khawar, the principal assistant secretary for the Employee Benefits Security Administration, explained in a webinar on Monday that advisers compliant with the Securities and Exchange Commission’s Regulation Best Interest rule could use the same policies and procedures to comply the newly finalized Retirement Security Rule.

The EBSA hosted webinar featured Khawar, along with other EBSA officials.

During the Q&A period, Khawar was asked if an adviser could use their Reg BI policies to comply with the Department of Labor’s new rule. Khawar said: “the short answer is yes.” He added that “there are parts of this that very closely align with Reg BI,” and Reg BI “is absolutely a basis for thinking about compliance” with the Retirement Security Rule.

Khawar was also asked if insurance agents must be informed about mutual funds or even licensed to transact in securities to remain compliant with the rule. Khawar answered that he does not expect every insurance agent to be licensed or make filings with the SEC.

He did say, however, that an insurance agent selling an annuity to a retirement investor must “understand what it is that the person is giving up as well as what they would buy.”

The answer suggests that insurance agents must at least be knowledgeable of the assets that the investor would be selling in order to purchase the annuity, which would include securities in most cases, to be sure that the recommendation was in the investor’s best interest.

The DOL officials took the industry questions as financial professionals working in retirement plan advisement, savings rollovers and annuity sales parse the final rule posted in the Federal Register last Thursday.

Khawar had noted ahead of the final rule being issued that EBSA had made some changes to eliminate some firm disclosures to “harmonize” better with the SEC’s Reg BI and be less duplicative.