|
The DOL rule, proposed in mid-April, is intended
to protect investors from being steered into high-fee products
by retirement advisers who, the Labor Department said, may put
profit-making ahead of the client's interests.
The new standard would hold brokers who offer retirement account
advice to a higher "fiduciary" standard of putting their
customers' interests first. They currently must recommend
investments that are "suitable” for investors.
But industry groups have warned that a sweeping rule change
could limit retirement products available and force firms to
invest in disclosure and take on more liability.
"Honestly, I believe (the proposal) will leave millions of
people without the advice they're getting today," Paul Reilly,
chief executive officer of the independent brokerage Raymond
James Financial, which could be affected by the rule if it is
passed, told analysts on a conference call.
The rule would drive the burden of compliance too high for many
firms to rationalize working with some accounts, said Paul
Shoukry, vice president of finance and investor relations at
Raymond James.
Reilly is not alone in speaking out against the rule, but other
Wall Street leaders' whose brokerages could be impacted by the
rules have been more subdued in their comments.
Morgan Stanley Chief Financial Officer Ruth Porat said Monday on
an earnings call echoed part of Reilly's comments saying that
the rule would likely to push compliance costs higher. But, she
said, it wouldn't have "a major impact on the firm's business."
Charles Schwab Corp Chief Executive Walt Bettinger said on a
conference call with analysts on April 16 that his company is
better prepared to deal with a higher standard of care because
it services thousands of fee-based investment advisers and
brokers who already meet the proposed fiduciary standard.
The DOL began a 75-day comment period and will a host public
hearing. On Tuesday, a coalition of 16 trade groups including
the Securities Industry and Financial Markets Association (SIFMA)
submitted a letter to the department requesting the comment
period be extended to 120 days to allow more discussion.
(Additional reporting by Jed Horowitz; Editing by Cynthia
Osterman)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
|
