The initial proposal drew darts from numerous insurance and securities industry lobbying groups, including the National Association of Insurance Financial Advisers and the Financial ServicesInstitute who feared their salespeople would have to limit the products they could suggest for retirement plans.Various groups argued that retirement plan participants would see investment costs rise under the standard. They also said the Labor Department proposal would likely conflict with a separate fiduciary rule that the Securities and Exchange Commission is planning to govern brokers who give investment advice to individual clients.
The pension plan proposal also would have forced big brokerage firms such as Bank of America‘s Merrill Lynch & Co. and Wells Fargo & Co.‘s Wells Fargo Advisors to decide whether to limit their brokers from working with corporate retirement plans.
The Labor Department rule would not only limit brokers’ ability to recommend their companies’ own products to employers but prohibit them from collecting commissions from investment companies when employees purchase their funds or other retirement plan products without providing extensive disclosure.
Is everyone forgetting ERISA 404a ‘for the exclusive benefit of the plan participant and their beneficiaries’? It seems the financial institutions are more concerned with their own bottom line and the the best interest of the customer.
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