Great-West president, Charles P. Nelson, warned the Department of Labor’s Employee Benefits Security Administration (EBSA) at today’s hearing that his company is “deeply concerned” that some provisions in the proposed rule will deeply damage the industry. Some of the points he made included:
- Dramatically increasing costs to 401(k) participants and plan sponsors by eliminating advancements that provide DC plans with greater efficiencies and cost-savings though open architecture investment platforms, and,
- Substantially curtailing plan distribution communication, education and counseling, reducing the availability of information participants need to make informed decisions about their distribution options.
According to Nelson, EBSA’s intended policies with the rule change are not clear from the text of the proposal, preventing thorough public review and comment. Revising the rule for public review and comment will enable the Department to articulate a clear standard. Asserted Nelson: “Rather than speculating on what the rule might mean, commentors will be able to offer more meaningful comments on what the rule would actually do.”
Nelson testified that Great-West is also concerned that it is unclear what the Department meant by limiting the exception to providing “general financial information” about platform investments. “We believe ‘general financial information’ should include information platform providers provide related to plan mapping and conversions, such as assistance in determining which platform options are similar to the prior plan investments.”
The Great-West executive backed the sales exception in the rule but said “we are concerned that the exception as written would not work in practice.” According to Nelson, the proposal should expressly recognize that the sales exception is not limited to a specific point at the beginning of the relationship. Information related to sales is exchanged on an ongoing basis as plans make changes to fund line ups or implement new design features months or years later.
Finally, Nelson said Great-West is “very concerned” about the future of advice to IRA-holders and distribution counseling for participants. Nelson concluded: “We believe the Department has identified some valid concerns with the existing regulation, but we also believe that the proposal as written does not work. We should not create new problems while trying to solve old ones.”