WASHINGTON The U.S. Department of Labor is eyeing August as a target to release a controversial proposal that would require retirement plan financial advisers to put their clients' interests ahead of their own, a department official confirmed Wednesday.
"We are not quite finished. We haven't made all of our decisions," Phyllis Borzi, the assistant secretary of the Employee Benefits Security Administration, said in remarks at an event held by the Financial Services Roundtable. "August is our goal."
The Department of Labor has been working for several years to overhaul regulations that govern how advisers provide advice to clients in workplace retirement plans such as 401(k)s and individual retirement accounts.
The idea behind the plan is to reduce potential conflicts of interest because advisers who offer rollover advice to retirees stand to benefit financially.
The plan generated massive opposition from the industry, which said it would drive up costs, curb commissions and ultimately hurt customers.
Critics also complained the Labor Department's rule could conflict with a separate fiduciary-rule making effort under consideration at the Securities and Exchange Commission that would harmonize rules between broker-dealers and investment advisers.
The Labor Department subsequently scrapped its initial draft but vowed to come up with a new one. Since then, it has held roundtable discussions and sought more comments from the public. Its release has been long-delayed.
Borzi stressed on Wednesday that the August date is merely a goal and that the proposal may not be completely ready by then.
"It is much more important to get it right than it is to meet some arbitrary deadline," she said.
At the same event on Wednesday, SEC Republican Commissioner Daniel Gallagher said it is still very unclear whether the SEC will ultimately move on its own fiduciary rule.
The SEC has been collecting data to better understand whether customers are confused by the different legal standards that apply to brokers and advisers. Under current law, brokers are only required to offer products "suitable" to clients, while advisers are held to the higher fiduciary standard.
So far, the SEC has not opted to propose regulatory changes.
Gallagher told the audience there still is a question as to whether a majority of the five-member commission will agree to press ahead with new rules to require brokers to act as fiduciaries.