NAIFA wholeheartedly supports a best interest standard for retirement investment professionals, but believes the Department of Labor's proposal to impose a fiduciary-only regulation goes too far, NAIFA Secretary Chris Gandy wrote in letter submitted to be part of the official record of a recent House Subcommittee on Health, Employment, Labor, & Pensions hearing entitled "Protecting American Savers and Retirees from DOL’s Regulatory Overreach.”

In the letter, NAIFA thanks Representatives French Hill (R-AR) and David Scott (D-GA) who have urged DOL to withdraw the rule. 

"Nearly all NAIFA members, regardless of whether they are independent or affiliated, and many of their clients, will be significantly impacted by the Department’s Proposed Rule, with low- and middle-income savers hit the hardest," the letter states. NAIFA is particularly concerned that the proposal would eliminate the ability of consumers to chose how and from whom they receive guidance as they prepare for retirement. 

Some consumers are better served by professionals operating under a fiduciary model, while others are better served by professionals operating under a best interest model. NAIFA believes both options should be available, but the DOL proposal would limit consumers' choices.

Existing laws and regulations, including the SEC's Regulation Best Interest and the NAIC annuity transactions model in place in 44 states and counting, provide strong consumer protections without limiting consumers' options. The proposed rule will restrict access to professional services for low- and middle-income Americans who often cannot meet the account minimums frequently required fiduciary providers.

The DOL proposal will also harm small businesses by increasing costs. A NAIFA survey found:

• 92 percent of respondents will incur increased costs from the additional disclosures.
• 91 percent of respondents will incur increased record-keeping costs.
• 90 percent of respondents will incur increased costs for hiring and training new
  employees.

Financial professionals who now serve clients under the best interest model would have to choose from unpalatable options. They could stop providing investment advice as defined by the proposal; institute fee-for-service business models likely to exceed the means of low- and middle-income investors; or comply with the proposal's prohibited transaction exemptions, which will increase compliance obligations and costs.

NAIFA has asked the DOL to withdraw its proposal and will continue to advocate on behalf of the small businesses and consumers it would harm.