The Securities and Exchange Commission and Department of Labor fought mightily over provisions in the fiduciary proposal, discord which will most certainly be seized upon by the critics of the proposal.
According to Reuters, the DOL rejected numerous recommendations from the SEC and other agencies, something Republican Senator Ron Johnson, chairman of the Senate Homeland Security and Governmental Affairs Committee, detailed in a 39-page report.
The news service notes that part of the Senate panel’s report focused on July 31, 2012 emails between Labor Department economist Keith Bergstresser and SEC economist Matthew Kozora. They discussed types of improper broker activity that the rule should measure: conflicts of interest or impact on investment returns.
“I hate to break it to you, but you’re wrong,” Bergstresser wrote to Kozora, according to the report. “People do not respond to fees or any other costs, but they do chase returns.”
“You keep circling back to the same statements, many or which are unsupported conjectures on your part,” Bergstresser later wrote to Kozora. “If you have nothing new to bring up, please stop emailing me about this topic,” Bergstresser wrote.
“I am also now utterly confused as to what the purpose of the proposed DOL rule is then, if not to limit advisor conflicts when providing retirement advice,” Kozora later wrote.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
