DOL: Small Savers Not Who You Think They Are

By ASPPA Net Staff • September 14, 2015 • 0 Comments
The Department of Labor (DOL) has launched a new initiative in the communication “war” about its conflict of interest proposal.

The DOL recently published a “Q&A on Small Savers” which leads off by stating, “Small IRA savers may not be who you think they are,” and goes on to point out that more than two-thirds of small-IRA owners may have small IRAs, but they are “wealthy and upper-middle class households.”

The six-question piece, which leans heavily for its data sourcing on the Labor Department’s Regulatory Impact Analysis, makes points the DOL has made previously:

  • conflicts of interest impact low- and middle-income small savers (distinguished from “small savers” generally, apparently);
  • those low- and middle-income savers are particularly vulnerable to the impact of those conflicts during the rollover process; and
  • those same savers will still be able to receive education and advice under the new rule.
Indeed, a casual reading of the piece might lead one to think that there’s no “news” here at all, other than to perhaps present the DOL’s position(s) in a format more approachable to the lay reader.

However, as noted above, there is the distinction made between “small savers” and low- and middle-income small savers that opens the piece. Further on, the DOL notes that those low- and middle-income small savers “…generally do not receive the types of detailed personalized advice that many envision when they think of financial advice.”

The piece goes on to note that, “…the status quo is not one in which these small savers are frequently being provided full-service professional advice, and limited number of small savers that do participate in the IRA marketplace are generally turning to other lower-cost options for guidance on what to do with their investments.”

And the piece later says that the DOL “…anticipates that this rule will help encourage further development of low-cost advice solutions that provide savers with the level of advice that best suits their needs,” and that, “Going forward, these technology-based models will be an excellent option for some and a support and supplement to traditional advice — which will continue to be available under the proposed rule — for others.”