The leading player in the Department of Labor's effort to raise investment advice standards for retirement plans is patiently waiting on the sidelines while her boss talks to opponents of the measure.
Labor Secretary Thomas Perez has been meeting with industry representatives to hear their qualms about the measure, which would expand the definition of “fiduciary” under federal retirement law to include more advisers, such as brokers who sell individual retirement accounts.
During his Senate confirmation hearings last year, Mr. Perez promised to listen to the financial industry. He had a meeting as recently as last week with “folks in the business community,” he told reporters on Monday after an appearance at the National Press Club.
His meetings do not include someone who is eyed warily by Wall Street, Assistant Labor Secretary Phyllis Borzi, who has championed the rule since its inception.
Mr. Perez is following through on his pledge at his confirmation, Ms. Borzi told reporters on Tuesday on the sidelines of a Department of Labor event celebrating the 40th anniversary of the Employee Retirement Income Security Act.
“He wanted to hear it for himself, so he's doing it,” Ms. Borzi said. “I tend not to go to the meetings. They have a clean shot to make their case to him. The meetings will continue until the secretary feels like he has fulfilled his commitment.”
The DOL was supposed to release the re-proposed regulation, which it calls the conflicts-of-interest rule, earlier this year. In May, the agency
delayed it until January to give Mr. Perez time for his outreach.
“We wanted to slow the process down so that we could listen and learn and understand with granularity what the nature of the problem is and what the nature of the various stakeholder concerns are,” said Mr. Perez, who is a contender to be nominated attorney general. “I'm a big believer in doing active listening and learning because that informs our judgments.”
Neither Mr. Perez nor Ms. Borzi would confirm that the re-proposed rule will be released in January. Each of them would only say that it's “on our regulatory agenda.”
The rule was first proposed in 2010 as a way to protect workers and retirees from conflicted advice as they build their retirement nest eggs. It was withdrawn after fierce opposition from the financial industry and both parties in Congress. Critics said the original measure would curb broker compensation and drive them out of the market for smaller investors.
One of the organizations that is skeptical of the rule, the Insured Retirement Institute, is pleased with Mr. Perez's approach.
“The administration and Secretary Perez are very open to receiving factual information, research, anything that can help inform the debate and discussion further,” Cathy Weatherford, IRI president and chief executive, said on Tuesday in an interview at the ERISA event.
One fear of the Wall Street opponents of the rule has been laid to rest. The Obama administration has not made fiduciary duty an election-year issue.
During his National Press Club speech, Mr. Perez outlined a number of ways to ensure “shared prosperity” and help more people join the middle class, including raising the minimum wage, rebuilding the nation's infrastructure, investing in job training, reforming the immigration system, protecting collective bargaining rights and passing equal-pay laws. He did not mention the pending conflicts-of-interest rule.
Neither the agency nor Ms. Borzi is necessarily backing away from the fiduciary fight.
“These financial issues are tough for ordinary people to navigate,” Ms. Borzi said. “We need to make sure that the advice they get is objective and in their best interest. And there are lots of different ways we can get to that point.”
