"There is a point at which delay equates to surrender," said Mercer E. Bullard, an associate professor at the University of Mississippi School of Law and investor advocate. "There is a real concern."
Opponents — including the Securities Industry and Financial Markets Association, known as Sifma, which represents large Wall Street firms, and the Financial Services Institute, which includes smaller independent advisers — contend that new rules could disrupt the way they get paid, and therefore make it difficult for them to serve smaller investors. But consumer advocates argue that those predictions are premature since nobody has yet seen the revised rules.
More specifically, the Wall Street firms and brokers say they are concerned the new regulations will prohibit them from charging commissions, even though Ms. Borzi has said commissions will be permitted.
"We think they won't adequately allow for commission-based accounts and therefore investors will be hurt," said Ira Hammerman, general counsel for Sifma. "It's like, 'Just trust me. We will work it out.' "
Fiduciaries under Erisa, as it's written now, cannot be paid in ways that would pose a conflict of interest. But the way brokers and insurance agents are compensated often contains potential conflicts: a broker might receive a higher commission for recommending one investment over another. And arrangements known as revenue sharing, where mutual fund companies share a portion of their revenue with the brokerage firm selling the fund, also provide opportunities for conflicts. Fund companies that pay more, experts said, might get a spot on the firm's list of recommended funds.
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"The real problem with revenue sharing is that it is an undisclosed, under-the-table payment from the broker to the adviser," said Professor Bullard, though he noted that not all arrangements were conflict-ridden.
The Labor Department did not return repeated calls seeking comment. But in an interview last November, Ms. Borzi said the agency would take a close look at these types of payments and others that might provide financial incentives to push certain products. She also said it was not the agency's intent to put people out of business and that the public would have time to comment on the rules before they were issued. "Our intent is to protect consumers from conflicted investment advice," she said.
In March, Ms. Borzi confronted many of the arguments from critics of the rule at an event hosted by the Financial Services Roundtable, an industry trade group. "Here is what I don't understand," she said at the meeting, which is on YouTube. Why are people "so opposed to our even putting a proposal — a first crack at a discussion proposal — on the table?"
There have also been repeated delays and strong pushbacks to broaden the fiduciary rule that covers all retail accounts, not just retirement accounts. Dodd-Frank, the financial regulatory law that went into effect in 2010, gave the Securities and Exchange Commission the authority to propose a rule that would require brokers to act as fiduciaries — but it did not require that the agency write any rules. (Brokers are currently required only to recommend "suitable investments," while professionals known as investment advisers must act in their customers' best interest).
Four years later, the S.E.C. still has not said whether it will even propose a rule. In fact, Daniel M. Gallagher, a Republican commissioner at the S.E.C., said in March that he was not sure a majority of the commission believed a stronger rule was necessary. "It is still very much an open issue," he said at the event held by the Financial Services Roundtable.
"It would be lovely to think these issues aren't political," added Barbara Roper, director of investor protection at the Consumer Federation of America, "but these issues are political."
As Ms. Roper concluded, fiduciary duty won't necessarily stop "bad people from doing bad things. But it may provide something of a deterrent and it may increase the likelihood that investors will be able to recover damages."
—By Tara Siegel Barnard, The New York Times