Wall Street breathed a sigh of relief Wednesday when the industry finally got a look at the Obama administration’s new retirement-advice regulation, discovering some onerous requirements floated earlier had been scaled back.
A broad coalition of financial firms, trade groups, and Republican politicians, joined by a handful of Democrats, spent the past year mounting a fierce counterattack to the Labor Department rule promising to shake up the $14 trillion in assets parked in 401(k)s and individual retirement accounts.
But the rhetoric following the release of the much-anticipated final version softened a bit.
John Thiel, head of Bank of America Corp.’s Merrill Lynch unit, said in a statement Wednesday that he was pleased that officials “worked to address many of the practical concerns raised during the comment period.” In July, his institution said in a comment letter that the previous draft announced last April was “unworkable,” and “highly burdensome and expensive.”
Similarly, Cetera Financial Group President Adam Antoniades acknowledged that the administration “has considered some of the industry’s concerns.” The brokerage, which works with more than 9,000 independent financial advisers, had blasted the earlier version as risking “a number of negative and unintended consequences.”
The stocks of several large brokerage, insurance and asset-management firms rose in morning trading, in part because of initial positive analyst reactions to the softened requirements. They generally ended the day flat or up in line with the market, as legal teams across the industry continued to hunt for the potential devil in the voluminous detail of the new rule.
Not everybody was ready to declare a truce from the pitched battle over the rule, which requires retirement advisers to act as “fiduciaries,” legally bound to act in their clients’ “best interest,” a stricter standard than the current one for brokers only requiring “suitable” guidance. Advocates of the new policy say the old rules encourage advisers to charge excessive fees, favor investments that offer hidden commissions and recommend securities that can be difficult for investors to sell.