In hopes of getting a chance to testify at the DOL’s August hearing, The Securities Industry and Financial Markets Association (SIFMA) has sent eight comment letters to the Department of Labor (DOL) about the proposed fiduciary redefinition. Among the association’s concerns are the potential effect of the rule on investors with commission-based accounts.

The group said it is deeply concerned that the DOL has proposed a rule that would harm U.S. individual investors because of what it calls the DOL’s complete recasting of the ERISA definition of who acts as a fiduciary. Two of the letters comment on the rule itself; each prohibited transaction exemption is addressed separately. SIFMA’s concerns are similar to the ones it stressed in 2011, when the last fiduciary rule was proposed.

Among SIFMA’s concerns are that the prohibited transaction exemptions in the proposed rule will limit access to financial guidance, reduce choice and ultimately raise the cost of saving for retirement. 

According to Tom Price, managing director, operations and technology at SIFMA, the organization factored account-level data and actual trading data of investors with individual retirement accounts (IRAs) into its opinions. The data—from a study by NERA Economic Consulting—is up to date, Price said on a media call to discuss the letters, not from a decade ago or more.

Among their findings: the cost of commission-based accounts would be higher for many individuals if they had to convert, Price said, noting that currently investors can choose, and do in fact select the model that’s appropriate for them.

“Many accounts might not even meet the minimum balance required to have an account,” Price said, since thresholds can be between $25,000 and $50,000. If the economics don’t work to move these investors into a wrap account, some investors could be left on their own, unable to access a commission-based account but below the level needed for an advisory account.

The performance of commission-based accounts is a high-level point, Price said, and NERA found that commission-based accounts do not underperform fee-based accounts. “What is the problem that you’re solving here? People are making these choices ably already,” he said. According to NERA’s study, in 2014, the median trade frequency in commission-based accounts was just 6 trades versus 57 trades in fee-based accounts, with larger accounts trading more frequently than smaller ones.

“We agree with the DOL that more can be done to help Americans save for retirement and that there should be a best interests standard in place; however, we believe DOL is the wrong regulator to be in the lead here,  and the rule as written completely misses the mark,” said Kenneth E. Bentsen, Jr., SIFMA president and CEO.  “SIFMA’s comment letters reflect our ongoing concerns that the DOL’s proposal would cause harm – particularly to low and middle-income retirement savers – by limiting investors’ access to choice and guidance, while raising the cost of saving.”

A link to all SIMFA’s comment letters is on their site.