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Ronald Kruszewski, CEO of Stifel Financial

Life Health > Annuities > Fixed Annuities

Stifel CEO Says Final DOL Rule Is 'Less Restrictive' Than He Feared

By Allison Bell

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Two financial services company executives gave mixed reviews to the final versions of the Labor Department’s new fiduciary rule regulations in conversations with securities analysts last week.

The department posted a draft in October 2023 and published a final version of an investment advice fiduciary definition, along with guidelines applying the definition to investment advisors and independent insurance agents, in the Federal Register Thursday.

Ronald Kruszewski, the CEO of Stifel Financial, said that he likes changes in the final version that should make advising retirement plan participants easier but worries about conflicts between the new Labor Department requirements and the U.S. Securities and Exchange Commission’s Regulation Best Interest.

Dan Houston, the CEO of Principal Financial Group, also welcomed changes related to plan administration but suggested that, if the new regulations stand, they will drive up costs.

The executives touched on the fiduciary definition during conference calls their companies held to go over first-quarter earnings.

What it means: Executives at investment firms and life insurers are starting to get past generalities about the new Labor Department regulations and find out what’s in there.

Ronald Kruszewski: Kruszewski runs Stifel Financial, a St. Louis-based asset manager with $458 billion in assets under management.

He talked about the new regulations Wednesday, a day after a preview version came out.

“My first blush reaction was that it appeared to dial back from the proposal that came out originally,” he said. “I was somewhat surprised that, at least on an initial review, the rule appears to be less restrictive than what was proposed.”

The final version does appear to target non-variable indexed annuities, and insurance groups are likely to challenge the rule in court, Kruszewski said.

But the final version and the implementation guidelines will help advisors continue to provide general education for retirement account rollovers, he said.

He suggested that any gaps between the new regulations and Reg BI could be a problem.

“Most of our clients have retirement IRAs, and they have taxable accounts,” he said. “We can’t be operating under two standards. I know the industry is going to look at that.”

But Stifel has already worked hard to implement Reg BI, and as long as the new regulations work well with the SEC rules, the new regulations should not significantly affect Stifel’s business, he said.

Dan Houston: Principal sold its non-variable annuity business but still sells individual variable annuities and has a large 401(k) plan business.

Houston emphasized that Principal can handle the new investment advice fiduciary requirements.

“Principal has a history of effectively adapting to and responding to regulatory change, while continuing to meet customer needs, and we’ll do the same with this latest rule,” Houston said. “We are analyzing the final rule and what it means.”

Houston praised some changes Labor Department officials made to the original version.

The original draft could have kept Principal from even helping retirement plan participants to understand plan loans and hardship withdrawals, he said.

In the final, revised version, he said, the Labor Department confirmed the importance of financial education in workplace retirement plans and included language affirming that educational support for retirement savers reinforces positive saving behaviors.

“The ability for us to continue to provide participant insights in the normal course of business is now affirmed, it seems,” Houston said.

But Houston said Principal is still concerned that the final rule end up increasing compliance costs and limiting consumer access to financial tools and financial advice.

Pictured: Ronald Kruszewski, CEO of Stifel Financial (Credit: Bloomberg)

Allison Bell

Think_Allison

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