American Retirement Association CEO Brian Graff employed a simile at the organization’s 401(k) Summit in Nashville on Sunday that left little doubt about how he, and by extension the ARA, feels about the new DOL fiduciary rule.
“It’s like birthing a baby,” Graff said. “You wait and wait and then it’s finally here and it keeps you up at night and, in the case of boys, pees in your face when you’re changing its diaper.”
Noting that the new rule is the size of the bible, he said he’s read it twice, and keeps going back to it when something comes to mind.
“After a baby pees in your face you might want to put it up for adoption, as many who are now filing lawsuits against the rule want to do, but we can’t walk away. We have to deal with it.”
Graff argued that the only clear winners from the rule are lawyers, because they benefit from trying to interpret the regulation, “as they always do.”
Graff then went into a detailed discussion of how the rule will likely affect the 401(k) advisors business. He began with IRA rollovers, and details some of the potential problems that would occur with plan mergers and other specific instances.
“What happens when a plan participant just comes up to you, which does happen, and says ‘please help me with my rollover, please take my money?’” Graff asked. You’re not directing the rollover in that case, the participant requested your help.”
One item of which Graff and the organization were particularly proud was the plan education exemption that Graff said the organization helped include in the final rule.
One major theme Graff repeatedly emphasized was the best interest contract exemption, and specifically who will employ “BIC versus BIC light,” and when each is appropriate.
“Instituting the rule is not the end, but the beginning,” He concluded. “Now will come the lawsuits, interpretations and hundreds of FAQs issue by the DOL. We’ve know some of those people for years and plan to leverage our relationships to help sort it out.”