Letter to DOL on the Retirement Security Rule

Dear Assistant Secretary Gomez:

The American Bankers Association (ABA) appreciates the opportunity to provide comments to the Department of Labor (Department) on proposed amendments to the Department’s investment advice regulation (Fiduciary Rule) and related prohibited transaction exemptions (collectively, Fiduciary Proposal or Proposal) regarding the expanded circumstances under which a person is considered to be a “fiduciary” under the Employee Retirement Income Security Act of 1974, as amended (ERISA) or the Internal Revenue Code of 1986, as amended (Code). Specifically, the Fiduciary Proposal provides (i) a new regulatory definition of “fiduciary” when a person renders investment advice for a fee or other compensation for purposes of Title I and Title II of ERISA, and (ii) related proposed amendments to Prohibited Transaction Exemption 2020-02 (PTE 2020-02) and several other administrative exemptions from the prohibited transaction rules applicable to fiduciaries under ERISA.

Retirement investors have long looked to and relied on their bank to provide retirement services, including investment products, retirement planning, and investor education, in order to achieve a secure financial retirement. When acting in an ERISA fiduciary capacity, banks have always sought the best interest of their retirement customers and take great pride and satisfaction in successfully serving their customers’ retirement needs. We agree with the Department that retirement service providers, when acting as ERISA fiduciaries, should act in the best interest of customers and that such customers deserve protection from financial abuse. We also believe that regulations should be carefully crafted to meet their objectives without stifling the delivery of retirement products and services to customers, or capturing communications, conversations, or relationships that are not appropriately regarded as fiduciary in nature.

The definition of “fiduciary” is a foundational element of ERISA. Consequently, any structural, transformative change to the definition will fundamentally affect the availability and delivery of retirement products and services provided by our member banks. This calls for measured, targeted, and sensible rulemaking, since agencies must “propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” Any proposed rule, therefore, should (i) convincingly demonstrate a “compelling need” for such a change, and (ii) employ the “least burdensome tools” to accomplish its objective(s).

We believe that the Fiduciary Proposal neither demonstrates a compelling need to undertake a drastic regulatory reset nor employs the least burdensome tools to effect such change. On the contrary, we believe that the Proposal is overbroad and overreaching, and that it captures numerous persons and entities who provide valuable services to plans, plan fiduciaries, plan participants and beneficiaries, and IRA owners but who should not be viewed as, nor reasonably considered to be, a “fiduciary” under ERISA and the Code. If adopted in its current form, the Proposal is likely to harm the very plans, plan participants and beneficiaries, and IRA account owners that the Department is seeking to protect by making it extremely and unnecessarily difficult, complex, and costly for banks to make and deliver the products, services, and information necessary, helpful, and appropriate for achieving a financially sound retirement. As a result, the retirement planning benefits provided to these institutions and individuals will be significantly reduced or altogether eliminated.

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