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DOL Confict o Interest

RulemakingPresentation by

Micah Hauptman to theNational Press oun!ation

"une #$% &'#(

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raming )he Issue

DIY Retirement Planning Is ComplicatedHow much do I need to save?

What should I invest in?Whom should I trust for advice?When I leave a job what should I do?

!eave m" mone" in the old #$%&'( roll itover into a new #$%&'( or roll it over intoan IR)?

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Comple* In+estmentMarketplace

*eemingl" !imitless InvestmentChoices

)ll Come with ClaimsHigher returns+,ore diversi-cation+Downside protection+

How Does )n Investor ,a'e )nInformed Decision?

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Comple* In+estmentMarketplace

./uit"0Inde1ed )nnuit" ,ar'et 2alue)djustment

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inancial Il literacy

*ad 3ruth4 Investors !ac' 5nowledge of6)*IC 7inancial Concepts 8ecessar" to,a'e Informed Investment Decisions 9n

3heir 9wnInterest RatesIn:ationRis' vs; return*toc's vs; 6onds,utual funds

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inancial Literacy

If You Results4

Correct Incorrect Don,t -no.

Your Results8ational)verage ;@@ $;@% %; A

http://www.usfinancialcapability.org/http://www.usfinancialcapability.org/http://www.usfinancialcapability.org/http://www.usfinancialcapability.org/http://www.usfinancialcapability.org/

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/o In+estors )urn toinancial Pro essionals

7inancial Professionals Hold 3hemselves 9ut )s 3rusted )dvisers

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/o )hey )urn to inancialPro essionals

7inancial Professionals Hold 3hemselves 9ut )s 3rusted )dvisers

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/o )hey )urn to inancialPro essionals

7inancial Professionals Hold 3hemselves 9ut )s 3rusted )dvisers

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0' 1ear Ol! 2RI/3 i!uciaryRule

Current De-nition Determining Who Is a7iduciar" is 3oo .as" to .vade

)dvice must be provided on a Bregular basis9ne0time advice &e14 rollover( isn

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ine Print Legal Disclaimer

B uidanceprovided b"7idelit" iseducational innature is notindividualiEedand is notinten!e! toser+e as theprimary or solebasis for "ourinvestment orta10planningdecisions;

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)he /tan!ar! )hat 3pplies4/uitability

*ales *tandard 8ot 3rust *tandard)cts more li'e a Bdo not defraud standardthan advice standard9ut of all the suitable options canrecommend the least suitableIncentives to recommend whateversuitable product pa"s the advisor the mostPerverse Incentives &.14 Bratchetedpa"out grids(

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3ca!emic an! 2mpirical2+i!ence o Harm

Peer0reviewed academic studies thatshow bro'ers< incentives tilting their

recommendations to funds thatunderperform,"ster" shopper studies that showadvisors steering clients awa" fromlower0cost diversi-ed funds towardhigher0cost funds in the advisor

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)he Harm )o Retirement/a+ers

.vidence *uggests Con:icts )re CostingRetirement *avers 6illions

F%G billion a "ear &WH Council of .conomic)dvisers(Will cost between F billion and F%@ billionover the ne1t %$ "ears if not addressed &D9!(

3hese estimates are based on ane1amination of onl" one part of the mar'et; 3he" don

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)he DOL Confict o InterestRule

D9! Rule 3o Jpdate 7iduciar" Investment)dvice De-nition and Related .1emptions

Closes loopholes so -duciar" dut" can

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)he 5IC 2*emption

)llows Commissions *ubject to ConditionsDesigned to .nsure Retirement *avers areProtected from Con:icts

,ust contractuall" agree upfront to serve investor

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5etter Outcomes

Retirement *avers Will 6ene-t When 3heir6est Interests are 6eing *erved

Recommendations will be based on what

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DOL6s Deliberati+e Process

Rule is Years in the ,a'ing9pen and inclusive process

.1tensive comment process andhearings,an" changes from proposed rule to

-nal rule designed to aidimplementation and compliance

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inancial In!ustry Oppositionto Rule

,ainl" from 6ro'er0Dealer and InsuranceIndustr"4 eneral )rguments

Claim the" are well0regulated and it7I8R) should determine thatstandard

Response4 *.C>7I8R) have authorit" onl" oversecuritiesK wouldn

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inancial In!ustry Oppositionto Rule

*peci-c )rgumentsClaim commissions will be eLectivel"

illegal and as a result4Costs will increase*mall savers will lose access to productsand services and ma'e worse decisions;

Response4 Commissions not bannedmultiple wa"s to receive -duciar"advice

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inancial In!ustry Oppositionto Rule

Congressional )ttempts to 5ill D9! RuleRetail Investor Protection )ct &Wagner(

*trengthening )ccess to 2aluable.ducation and Retirement *upport&*)2.R*( )ct and the )LordableRetirement )dvice Protection &)R)P( )ct&Ros'am Roe(Resolution of Disapproval

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inancial In!ustry Oppositionto Rule

!egal )ttempts to 5ill D9! Rule !awsuits Have 6een 7iled &so far(Common Claims4

Claim D9! e1ceeded authorit" to actencroached on *.CClaim D9! didn

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)hank 1ou

Muestions?

Contact4,icah Hauptman

7inancial *ervices Counsel

Consumer 7ederation of )mericamhauptmanNconsumerfed;org & $ ( O %$$#

N,icahHauptman

mailto:mhauptman@consumerfed.orgmailto:mhauptman@consumerfed.org