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Testimony of Securities Industry and Financial Markets Association to ERISA Advisory Council re Revenue Sharing and Disclosure (PDF)

Excerpt: I will begin by providing some background information about revenue sharing arrangements and the basis upon which they are determined. In providing this background information, I will talk about the confusion created by the use of the term 'revenue sharing' and emphasize the need for greater clarity in the terminology used to describe different types of revenue streams. I will then turn to address the subject of guidance that might be issued by the Department of Labor regarding the proper use of any plan assets resulting from a plan's receipt of these payments, and how any such assets should be allocated to participants.

SIFMA Submits Comments and New Evidence of the DOL Fiduciary Rule's Negative Impact on Retirement Savers

"SIFMA provides the following to assist in the DOL's review of the Rule: [1] data detailing the negative impact to investors as firms move to implement the Rule and Exemptions; [2] An explanation of why it is unnecessary to create a new private right of action to change the standard of conduct in the financial services sector; [3] Changes to the regulatory language needed to help make this Rule work for retirement savers; [4] Comments regarding the Exemptions; and [5] A proposed new principles-based exemption that protects investors and provides certainty to service providers seeking to comply with the Rule's intent." [See full text of comment letter and Deloitte study commissioned by SIFMA.]

SIFMA Comment Letter to DOL on Proposed Delay and Reconsideration of Fiduciary Rule (PDF)

128 pages. "[T]he path chosen by the former Administration has proven to be impractical, unworkable, unrealistic and therefore, unlikely to lead to better financial results for retirement savers.... [1] It limits products and services and makes both more costly to retirement investors. [2] It has disrupted the industry in such a way that millions of retirement savers will be unable to purchase lifetime income options ... [3] The exemptions' reliance on private plaintiffs to enforce the Rule significantly increases the probability of meritless litigation and will likely lead to even further increases to the costs of products and services[.]"

SIFMA Comment Letter to DOL on Its Fiduciary Rule Proposal

"The Department has greatly expanded the scope of service providers subject to the fiduciary requirements of ERISA and the Code ... while creating very limited, inflexible, and prescriptive exceptions and exemptions that do not work and will not be in the best interest of American retirement investors. The net effect is that this proposal, if enacted, would limit the ability of Americans to continue to receive personalized investment guidance for retirement plan accounts, which would result in a less secure retirement for many Americans already seeking to save and invest for their financial future."

SIFMA Comment Letter to EBSA on Proposed Delay of Fiduciary Rule

"Our members have spent hundreds of millions of dollars getting ready to comply with the Rule, and a group of our largest members alone estimate that they would need to spend an additional $300 million to be ready for the April 2017 compliance deadline. If the entire industry is in roughly the same position, more than a billion dollars must still be spent to be ready for the April applicability date. Further, members need to plan for the January 2018 compliance date. Without a corresponding extension of the transition period, members will continue to expend substantial resources."

SIFMA Comment Letter to SEC on Recommendations of the Investor as Purchaser Subcommittee on Broker-Dealer Fiduciary Duty (PDF)

"[T]he Subcommittee (and indeed, the Committee) does not have a single broker-dealer representative. A representative from our industry could provide the necessary perspective to help generate more practical, consensus-based recommendations that would benefit all parties, but most particularly retail investors.... Section 913 should be implemented through rulemaking under the Exchange Act for broker-dealers.... [This] rulemaking should require broker-dealers to provide customers with uniform, plain English disclosures.... Section 913 should not be abandoned in favor of an approach that Congress considered and rejected -- namely, tinkering with the broker-dealer exemption."

SIFMA Submits Comments to DOL on Proposed Safe Harbors for State-Run Retirement Plans

"SIFMA believes this proposal is a step in the wrong direction ... It does not address the fundamental issues that prevent Americans from saving more for retirement. It could lead to 50 different state plans throughout the country. It puts an additional cost burden on states and crowds out the private market. States would be highly unlikely to provide the same level of education, service and guidance as private sector providers."

SIFMA Raises Concerns with Proposed Fiduciary Standard at DOL Hearing

"SIFMA's members have long called for the implementation of a best interest or uniform fiduciary standard of care for brokers and advisors when providing personalized investment advice. On that the record is quite clear. Rather, we disagree with the process whereby one agency is developing yet another standard that will apply to only one sector of the retail investment market.... The bifurcation of standards will create confusion both for investors and the providers who must comply."

SIFMA Comments on a Proposed Definition of Fiduciary Regulation

SIFMA believes the proposed regulation would have unintended consequences including, but not limited to: 1) impacting the ability of millions of Americans to save for retirement; and 2) limiting access to markets, investment products and services providers.

SIFMA Lawsuit Claims Missouri Anti-ESG Rules Are Pre-Empted by ERISA

"The Securities Industry and Financial Markets Association [SIFMA] filed a lawsuit ... challenging two regulations enacted by the state of Missouri that require additional recordkeeping for advisers and brokers recommending or selecting investments with a 'non-financial objective.' The rules took effect on July 30." [SIFMA v. Ashcroft, No. 23-4154 (D. Mo. complaint filed Aug. 10, 2023)]

SIFMA Statement on House Bills Introduced to Protect Retirement Savers

"SIFMA has long supported the creation of a best interest standard for brokers, yet the DOL's proposal as written is fundamentally flawed and will hurt the very same investors it seeks to protect. We commend any congressional action that will help protect investor choice and access to guidance, without raising costs. Retirement savings is too important not to get this right."

SIFMA Comment Letter to DOL on Proposed Fee Disclosure Guide

"We are concerned, however, that the Proposal will impose additional and unnecessary costs on service providers where no evidence exists that the current disclosure rules are inadequate. Uncited anecdotal evidence is not a substitute for objective evidence that would illustrate the need for further regulation in this area and that need justifies the significant additional cost of the Proposal."

SIFMA Comment Letter to DOL on Proposals for Lifetime Income Illustrations in Pension Benefit Statements (PDF)

"We believe that regulatory efforts to encourage additional education should promote a range of approaches to help participants understand the lifetime income that is generated from their defined contribution account balance. While individualized benefit statement illustrations are one method, they are not the only way to engage participants at different points in their careers. Relying on one method may lead to a decline in the breadth and quality of educational tools now available to participants[.]"

Industry Associations Provide Joint Statement to NAIC on Best Interest Standard of Care for Annuities and Securities Transactions

"The standard that life insurance companies and financial professionals support will enable retirement savers at all income levels to maintain access to, and information about, annuities, the only financial products in the private marketplace that can guarantee lifetime income."

Associations Submit Comments to the Treasury on the Process for Transferring myRA Account Balances to Private Sector Roth IRAs (PDF)

"From a service provider perspective, there are inherent risks to having account balances defaulted when an account holder fails to provide instructions for a rollover, and there are certain factors that may make a Roth IRA provider unwilling to be selected to receive automatically transferred my RA account balances. Given these potential challenges, SIFMA, ABA, and FSR believe there are a number of issues Treasury should take into account before considering any default arrangement[.]"

Compliance Nightmare Possible in 2016, SIFMA Says

"The wealth management industry might be headed towards a 'compliance nightmare' next year should the Labor Department move ahead with its proposed fiduciary rule, SIFMA warned in its annual state of the industry briefing.... [T]he organization's leaders repeated their preference that the SEC lead the effort on creating a fiduciary rule instead of the Labor Department, citing concerns that the department's proposed rule would be unworkable in practice."

Insurance Industry Associations File Lawsuit Challenging DOL's Retirement Security Rule

"The insurance organizations have argued that the added fiduciary obligations are unnecessary, as annuity sales are already regulated by many states, and investment advice is generally guided by the [SEC's] Regulation Best Interest rules. More broadly, the firms have argued that the fiduciary obligations would be costly, restrictive, and ultimately limit retirement advice to people with fewer assets who cannot afford long-term financial advisers." [ACLI v. DOL, No. 24-0482 (N.D. Tex. complaint filed May 24, 2024)]

DOL Final Fiduciary Rule Faces Industry-Led Court Battle

"The U.S. Chamber of Commerce, along with the Securities Industry and Financial Markets Association [SIFMA], are preparing to file a lawsuit ... As many as three other trade groups will likely also join the lawsuit ... The groups are expected to target the primary means of enforcing the heightened retirement-advice standards: a provision that allows investors to file class-action lawsuits when they believe an adviser runs afoul of the new rules. Industry groups say that will open the $14 trillion market up to expensive litigation, and that the administration lacked congressional authority needed to include such a provision in the rule."

MyRA: The Administration Uses Disintermediation to Answer FSI's and SIFMA's Whining

"Investors in these accounts will see years when the stock market soars, yet their returns are very low.... And, when investors accumulate $15,000 in the accounts and are forced, by current regulations, to roll the account over into a Roth IRA, they will likely scream. Why abandon an account which apparently has no annual fee and an extremely low annual expense ratio? It won't be long before the MyRA account limit is raised substantially, or limits are removed completely. In essence, financial services disintermediation takes place. And it will continue to take place, now that the door has been opened. This may be the beginning of the end of defined contribution plan and IRA accounts managed by private financial services firms."

Written Testimony of Securities Industry Association at Hearing on Mutual Fund Industry Reforms (PDF)

21 pages. Excerpt: [W]e think that a hard close that can only occur at the mutual fund has some significant drawbacks for investors, and also may have some major operational difficulties. A hard close at NSCC may best meet concerns about a verifiable order entry deadline, while a hard close at the broker-dealer or other intermediary would be preferable from the vantage point of most retail investors and retirement plan participants.