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ARA Expands on Importance of Level-to-Level Exemption

As the comment period window closes on the Labor Department’s fiduciary proposal, the American Retirement Association has filed a supplemental comment letter with the DOL — and another House subcommittee schedules a hearing on the subject.

Specifically, the ARA sought to “amplify and clarify” two aspects of its proposed Level-to-Level Exemption. First, to emphasize that it is critically necessary because the BIC exemption would be completely unavailable to a significant majority of advisers utilizing levelized compensation models, since they have investment discretion over the accounts for which they provide services.

Second, the ARA comment letter points out that the Level-to-Level Exemption should contain language designed to impose a full ERISA section 404 standard on these unconflicted advisers to ensure that, even with their levelized compensation models, they are continuing to put their clients’ interests first — with the potential for enforcement action if they fail to live up to that standard.

The particulars of ARA’s proposed level-to-level compensation exemption were outlined by Marcy Supovitz, President-Elect of the American Retirement Association, at Labor Department hearings last month.

The comment period on the Labor Department’s fiduciary closes today, September 24.

Congressional Hearing Slated

Even as that comment period closes, House Committee on Ways and Means Subcommittee on Oversight Chairman Peter J. Roskam (R-Ill.) has announced that the Committee on Ways and Means Subcommittee on Oversight will hold a hearing on the Department of Labor’s proposed fiduciary rule on September 30. Roskam had indicated that the hearing was being scheduled while speaking at an industry event earlier this month.

Earlier this month two subcommittees of the House Financial Services Committee held a joint hearing on the fiduciary rule, with a bipartisan coalition of members expressing general skepticism about the necessity of the rule and raising concerns about its impact on savers with moderate balances in retirement accounts.