ASPPA Clarifies Stance on Definition of Fiduciary Proposal

In a statement, Brian Graff, Executive Director/CEO of ASPPA said: “We commend the DOL for attempting to address the issue—however we believe Individual Retirement Accounts (IRAs) should not be regulated by the Department without an effective means to enforce them.  

“If these rules continue to apply to IRAs, what will happen is that the heavily regulated firms like mutual fund and insurance companies will comply with the rules and less regulated companies won’t because they know there is no enforcement. As a consequence, applying these rules to IRAs could actually put investors at greater risk by giving unscrupulous providers a competitive advantage.”  

According to the statement, ASPPA’s testimony and comment letter to the DoL noted: “ASPPA, the Council of Independent Recordkeepers (CIkR), and the National Association of Independent Retirement Plan Advisors (NAIRPA) believe that these rules should not apply to Individual Retirement Accounts (IRAs). We recommend guidance for retail IRAs be considered in a comprehensive manner given the fundamental differences between IRAs and qualified retirement plans, and be supported by an active enforcement regime to ensure consistent application. Unlike retirement plans such as 401(k) plans, retail IRAs are not maintained by employers or employee organizations. Although this provides IRA owners with greater flexibility, it leaves them without many of the protections available to qualified retirement plans under ERISA and the Internal Revenue Code.”  

“Again, we strongly caution that the impact of the proposed regulation would create an unfair competitive advantage and leave unscrupulous providers to practice without an effective enforcement regime.”  

In March, declaring that prior reports of its position on the DoL proposed regulation redefining “fiduciary” were unclear, ASPPA insisted it and its affiliated organizations “strongly support” the changing of the standard (see “ASPPA Reiterates Support for DoL Fiduciary Definition Deliberations“).  

Text of ASPPA’s testimony to the DoL is here.