US Chamber of Commerce on Protecting Small Business Retirement
U.S.
Chamber of Commerce
“Protect
Small Business Retirement”
Tuesday, November 17, 2015
Key
Topics & Takeaways
-
Small Businesses and Their Employees: As a small business owner, Darlene Miller explained that under the fiduciary proposal, she will not be able to retain or attract employees as it is “discriminatory towards small businesses.”
- Is the Fiduciary Proposal Fixable?: The panel discussed the two items DOL issued on state run retirement plans on Monday, November 16, 2015 and stated that it is an “interesting contradiction.” Campbell explained that on one hand, DOL wants to impose one standard, but the administration wants to enable 50 different plans in 50 different states.
- Legislative Update: Rep. Roskam (R-Ill.) believes that there is an opportunity to legislate and raise the standard of the industry while maintaining the advice that individuals need. Moving forward, Roskam remains optimistic as there is an appetite for a bipartisan approach to fixing the rule.
Speakers1
-
Thomas J. Donohue,
President and CEO, U.S. Chamber of Commerce
- David Hirschmann, President and CEO, Center
for Capital Markets and Competitiveness (CCMC)
- Aliya Wong, Executive Director, Retirement
Policy, U.S. Chamber of Commerce
- Harry Alford,
President, CEO and Co-Founder, National Black Chamber of Commerce
- Karen Kerrigan, President and CEO, Small Business &
Entrepreneurship Council
- Darlene Miller,
President and CEO, Permac Industries
- Cathy Weatherford,
President and CEO, Insured Retirement Institute
- Alice Joe, Managing Director, CCMC
- Brad Campbell,
Counsel, Drinkler Biddle & Reath LLP
- Diana
Furchtgott-Roth, Senior Fellow and Director, Economics21, Manhattan
Institute for Policy Research
- Jim Szostek, Vice
President, Taxes & Retirement Security, American Council of Life Insurers
- Randy Johnson, Senior Vice President,
Immigration and Employee Benefits, U.S. Chamber of Commerce
- The Honorable Peter
Roskam, Chairman, House Ways and Means Subcommittee on Oversight, United
States House of Representatives
Thomas
J. Donohue, President and CEO of the U.S. Chamber of Commerce
Thomas
J. Donohue, President and CEO of the U.S. Chamber of Commerce, used the
opportunity to highlight the impact the U.S. Department of Labor’s (DOL)
Fiduciary Rule Proposal would have on small businesses and retirement. Donohue
highlighted four major complications with the rule that would affect small
businesses: 1) it would make investing more confusing, noting that there are
“no less than six different standards” investors would have to comply with; 2)
the rule implies that small businesses are not sophisticated enough to manage
retirement plans for their employees; 3) it is riddled with contradictions; and
4) the rule hinders a financial advisor’s ability to give good counsel to small
businesses. He stated that the DOL wants to “take over” retirement plans for
small businesses as they believe could do a better job than the private sector.
Panel: Small Business, Their Employees, and Retirement Benefits
Under the Rule
Harry Alford, President, CEO and Co-Founder, National Black
Chamber of Commerce
Harry
Alford gave details about the hurdles and confusion for future retirement
investors that the proposed rule will create if implemented. He said the rule
proposes to fix something which does not need fixing. Alford explained that the
longevity to small businesses is good employees and noted that good employees
seek security in their benefits.
Karen Kerrigan, President and CEO, Small Business &
Entrepreneurship Council
Karen
Kerrigan stressed the fact that small businesses cannot continue to absorb the
costs of new regulations. She explained that DOL proponents are defining and
defending the increase cost from three percent to six percent without
acknowledging that is not “low cost” impact for small businesses.
Darlene
Miller, President and CEO, Permac Industries
As
a small business owner, Darlene Miller explained that under the fiduciary
proposal, she will not be able to retain or attract employees as it is,
“discriminatory towards small businesses.” She stated that future employees are
more likely to ask small businesses, “What is your retirement plan?” rather
than “Do you have a plan?” and said she needs to be able to offer competitive
benefits.
Cathy
Weatherford, President and CEO, Insured Retirement
Institute
Cathy
Weatherford emphasized the consequences of the rule on Millennials, noting that
one out of every three Millennial is employed by a small business. She stated
that the rule induces a deprivation to small accounts. Weatherford explained
that individuals entering the work force want to understand how to save, how to
get rid of debt, and how to plan for retirement, but will be unable or
reluctant to do so if small businesses cannot provide benefits or if
individuals are deferred to online assistance. She added that if the Securities
and Exchange Commission (SEC) and the DOL cannot agree on what accounts are in
the “best interest standard,” how can they expect small business owners or
financial advisors to know?
Panel: Is the Flawed Fiduciary Proposal
Fixable?
Brad
Campbell, Counsel, Drinker Biddle & Reath LLP
In
explaining the unique structure of the Employee Retirement Income Security Act
(ERISA), Brad Campbell noted that “the rules are written backwards” in that a
fiduciary or advisor “cannot do anything unless it is allowed,” which he said
can actually prohibit someone from acting in their client’s best interest at
times. Campbell highlighted rollover advice as one example where the cost
difference is not indicative of a conflict of interest; rather it is based on
the structural difference between 401(k) plans and IRAs. He also highlighted
areas where the DOL attempts to circumvent its authority through the Best
Interest Contract (BIC) Exemption.
Campbell
explained that the fiduciary proposal will make it difficult for small business
employees to obtain advice. He noted that the conditions of the BIC Exemption
would make retirement plans more expensive and said would lead advisors to
charge more for small accounts. He stressed the absence of a transitional
period, how the rule lacks dictation of business models, and stated that it is,
“the most aggressive regulations since the ‘70s.”
The
panel discussed the two items DOL issued on state run retirement plans on
Monday, November 16, 2015 and stated that it is an “interesting
contradiction.” Campbell explained that on one hand, DOL wants to impose one
standard, but the administration wants to enable 50 different plans in 50
different states.
Diana
Furchtgott-Roth, Senior Fellow and Director,
Economics21, Manhattan Institute for Policy Research
Diana
Furchtgott-Roth stated that the fiduciary proposal reminded her of Obamacare,
in the sense that it neglects the idea that small businesses and their
different employees have different needs. She noted that Council of Economic
Advisors (CEA) estimate that savers are losing $17 billion annually from
conflicted advice is based on a “flawed” analysis of the academic literature,
and said the CEA does not take into account “actual returns.” She believes that
the proposed rule undermines an employee’s ability to decide their own savings
plan. When Furchtgott-Roth was asked if she believed the rule was fixable, she
stated that it is a regulatory burden, diminishes choices for consumers, and
ultimately is not fixable.
Jim
Szostek, Vice President, Taxes & Retirement
Security, American Council of Life Insurers
Jim
Szostek explained that not only will financial advisors face the challenges
accompanying the proposed rule, but also the financial institutions behind the
agents. Szostek discussed the difficulties that future consumers and advisors
will have and gave the example of advisors drafting six contracts until finding
what works for the consumer. He also stated that small businesses do not have
the capacity to comply with many of the requirements of the rule, noting that
the disclosure requirements would put pressure on small businesses to steer
away from qualified accounts.
Legislative Update
The
Honorable Peter Roskam, Chairman, House Ways and Means
Subcommittee on Oversight, United States House of Representatives
Rep.
Peter Roskam (R-Ill.) stated that he believes that the Federal government has
an agenda to “crowd every corner to get the private sector out of retirement
and savings.” Roskam believes that there is an opportunity to legislate and
raise the standard of the industry while maintaining the advice that
individuals need. Moving forward, Roskam remains optimistic as there is an
appetite for a bipartisan approach to fixing the rule, and encouraged the
audience to speak with Members of Congress to support the “principles” he
developed with Rep. Richard Neal (D-Mass.).
For
more information on this hearing, please click here.
U.S.
Chamber of Commerce
“Protect
Small Business Retirement”
Tuesday, November 17, 2015
Key
Topics & Takeaways
-
Small Businesses and Their Employees: As a small business owner, Darlene Miller explained that under the fiduciary proposal, she will not be able to retain or attract employees as it is “discriminatory towards small businesses.”
- Is the Fiduciary Proposal Fixable?: The panel discussed the two items DOL issued on state run retirement plans on Monday, November 16, 2015 and stated that it is an “interesting contradiction.” Campbell explained that on one hand, DOL wants to impose one standard, but the administration wants to enable 50 different plans in 50 different states.
- Legislative Update: Rep. Roskam (R-Ill.) believes that there is an opportunity to legislate and raise the standard of the industry while maintaining the advice that individuals need. Moving forward, Roskam remains optimistic as there is an appetite for a bipartisan approach to fixing the rule.
Speakers1
-
Thomas J. Donohue,
President and CEO, U.S. Chamber of Commerce - David Hirschmann, President and CEO, Center
for Capital Markets and Competitiveness (CCMC) - Aliya Wong, Executive Director, Retirement
Policy, U.S. Chamber of Commerce - Harry Alford,
President, CEO and Co-Founder, National Black Chamber of Commerce - Karen Kerrigan, President and CEO, Small Business &
Entrepreneurship Council
- Darlene Miller,
President and CEO, Permac Industries
- Cathy Weatherford,
President and CEO, Insured Retirement Institute - Alice Joe, Managing Director, CCMC
- Brad Campbell,
Counsel, Drinkler Biddle & Reath LLP - Diana
Furchtgott-Roth, Senior Fellow and Director, Economics21, Manhattan
Institute for Policy Research - Jim Szostek, Vice
President, Taxes & Retirement Security, American Council of Life Insurers - Randy Johnson, Senior Vice President,
Immigration and Employee Benefits, U.S. Chamber of Commerce - The Honorable Peter
Roskam, Chairman, House Ways and Means Subcommittee on Oversight, United
States House of Representatives
Thomas
J. Donohue, President and CEO of the U.S. Chamber of Commerce
Thomas
J. Donohue, President and CEO of the U.S. Chamber of Commerce, used the
opportunity to highlight the impact the U.S. Department of Labor’s (DOL)
Fiduciary Rule Proposal would have on small businesses and retirement. Donohue
highlighted four major complications with the rule that would affect small
businesses: 1) it would make investing more confusing, noting that there are
“no less than six different standards” investors would have to comply with; 2)
the rule implies that small businesses are not sophisticated enough to manage
retirement plans for their employees; 3) it is riddled with contradictions; and
4) the rule hinders a financial advisor’s ability to give good counsel to small
businesses. He stated that the DOL wants to “take over” retirement plans for
small businesses as they believe could do a better job than the private sector.
Panel: Small Business, Their Employees, and Retirement Benefits
Under the Rule
Harry Alford, President, CEO and Co-Founder, National Black
Chamber of Commerce
Harry
Alford gave details about the hurdles and confusion for future retirement
investors that the proposed rule will create if implemented. He said the rule
proposes to fix something which does not need fixing. Alford explained that the
longevity to small businesses is good employees and noted that good employees
seek security in their benefits.
Karen Kerrigan, President and CEO, Small Business &
Entrepreneurship Council
Karen
Kerrigan stressed the fact that small businesses cannot continue to absorb the
costs of new regulations. She explained that DOL proponents are defining and
defending the increase cost from three percent to six percent without
acknowledging that is not “low cost” impact for small businesses.
Darlene
Miller, President and CEO, Permac Industries
As
a small business owner, Darlene Miller explained that under the fiduciary
proposal, she will not be able to retain or attract employees as it is,
“discriminatory towards small businesses.” She stated that future employees are
more likely to ask small businesses, “What is your retirement plan?” rather
than “Do you have a plan?” and said she needs to be able to offer competitive
benefits.
Cathy
Weatherford, President and CEO, Insured Retirement
Institute
Cathy
Weatherford emphasized the consequences of the rule on Millennials, noting that
one out of every three Millennial is employed by a small business. She stated
that the rule induces a deprivation to small accounts. Weatherford explained
that individuals entering the work force want to understand how to save, how to
get rid of debt, and how to plan for retirement, but will be unable or
reluctant to do so if small businesses cannot provide benefits or if
individuals are deferred to online assistance. She added that if the Securities
and Exchange Commission (SEC) and the DOL cannot agree on what accounts are in
the “best interest standard,” how can they expect small business owners or
financial advisors to know?
Panel: Is the Flawed Fiduciary Proposal
Fixable?
Brad
Campbell, Counsel, Drinker Biddle & Reath LLP
In
explaining the unique structure of the Employee Retirement Income Security Act
(ERISA), Brad Campbell noted that “the rules are written backwards” in that a
fiduciary or advisor “cannot do anything unless it is allowed,” which he said
can actually prohibit someone from acting in their client’s best interest at
times. Campbell highlighted rollover advice as one example where the cost
difference is not indicative of a conflict of interest; rather it is based on
the structural difference between 401(k) plans and IRAs. He also highlighted
areas where the DOL attempts to circumvent its authority through the Best
Interest Contract (BIC) Exemption.
Campbell
explained that the fiduciary proposal will make it difficult for small business
employees to obtain advice. He noted that the conditions of the BIC Exemption
would make retirement plans more expensive and said would lead advisors to
charge more for small accounts. He stressed the absence of a transitional
period, how the rule lacks dictation of business models, and stated that it is,
“the most aggressive regulations since the ‘70s.”
The
panel discussed the two items DOL issued on state run retirement plans on
Monday, November 16, 2015 and stated that it is an “interesting
contradiction.” Campbell explained that on one hand, DOL wants to impose one
standard, but the administration wants to enable 50 different plans in 50
different states.
Diana
Furchtgott-Roth, Senior Fellow and Director,
Economics21, Manhattan Institute for Policy Research
Diana
Furchtgott-Roth stated that the fiduciary proposal reminded her of Obamacare,
in the sense that it neglects the idea that small businesses and their
different employees have different needs. She noted that Council of Economic
Advisors (CEA) estimate that savers are losing $17 billion annually from
conflicted advice is based on a “flawed” analysis of the academic literature,
and said the CEA does not take into account “actual returns.” She believes that
the proposed rule undermines an employee’s ability to decide their own savings
plan. When Furchtgott-Roth was asked if she believed the rule was fixable, she
stated that it is a regulatory burden, diminishes choices for consumers, and
ultimately is not fixable.
Jim
Szostek, Vice President, Taxes & Retirement
Security, American Council of Life Insurers
Jim
Szostek explained that not only will financial advisors face the challenges
accompanying the proposed rule, but also the financial institutions behind the
agents. Szostek discussed the difficulties that future consumers and advisors
will have and gave the example of advisors drafting six contracts until finding
what works for the consumer. He also stated that small businesses do not have
the capacity to comply with many of the requirements of the rule, noting that
the disclosure requirements would put pressure on small businesses to steer
away from qualified accounts.
Legislative Update
The
Honorable Peter Roskam, Chairman, House Ways and Means
Subcommittee on Oversight, United States House of Representatives
Rep.
Peter Roskam (R-Ill.) stated that he believes that the Federal government has
an agenda to “crowd every corner to get the private sector out of retirement
and savings.” Roskam believes that there is an opportunity to legislate and
raise the standard of the industry while maintaining the advice that
individuals need. Moving forward, Roskam remains optimistic as there is an
appetite for a bipartisan approach to fixing the rule, and encouraged the
audience to speak with Members of Congress to support the “principles” he
developed with Rep. Richard Neal (D-Mass.).
For
more information on this hearing, please click here.