The Department of Labor timeline for releasing the proposal for an expanded fiduciary duty for advisors who work with retirement plans has been delayed.
Speaking at the Financial Services Institute’s Financial Advisor Summit, Phyllis Borzi, the Labor Department’s assistant secretary for the Employee Benefit Security Administration, said that her agency is continuing to revise its proposal, and that it is more concerned about getting it right than delivering it in on the previously announced schedule.
But while the industry will not see the DOL’s proposal in October, it is coming. Borzi says she’s not stepping down and will not just let the SEC handle fiduciary duty. “We don’t have overlapping jurisdictions,” she explained saying there are two investment “buckets,” a retirement one and another for other securities. And while the SEC regulates securities across both, Borzi says retirement savings is “sacred money” and advisors should be held to a higher standard. She did note, however, that from the very beginning, the DOL has worked with other regulators including the SEC.
“The impact of this regulation is to attack problem, or address the problem of conflicted advice,” she says. As to what the new proposal will cover, Borzi says Individual Retirement Accounts, IRAs, will definitely be covered. “We’re going to cover them,” she says, adding that there’s an even grater need in IRA marketplace, there’s a need to protect investors.
FINRA arbitration is a dispute resolution process administered by the Financial Industry Regulatory Authority (FINRA). It provides a forum for resolving monetary disputes between investors and securities firms or brokers without going to court. The process is generally faster and less formal than traditional litigation, and decisions are made by a panel of arbitrators who are knowledgeable in securities law and industry practices. Arbitration through FINRA is binding, meaning the decision is final and enforceable in court. This process is commonly used for disputes involving investment losses, unsuitable recommendations, or misrepresentation. Investors must agree to arbitration in their brokerage agreements, often as a condition of opening an account. While arbitration can be a more efficient way to resolve disputes, it also has limitations, such as limited appeal options and potentially high costs. Despite these challenges, FINRA arbitration remains a crucial mechanism for investor protection and dispute resolution in the securities industry.