Rollover

By Mack Bekeza

In recent news, Thrivent Financial for Lutherans filed a lawsuit against the DOL over the new fiduciary rule and how it could prevent Thrivent from resolving disputes internally. Specifically, Thrivent is seeking a preliminary and permanent injunction against part of the rule that will allow investors to bring a class action against them.

So, why is Thrivent Financial worried about not being able to resolve disputes internally? For one, Thrivent primarily employs sales representatives who sell proprietary insurance and investment products on a commission basis, which will be considered a prohibited transaction under the new rule. Second, one of the primary sources of their total revenue comes from IRA investments and rollovers from qualified plans. In essence, Thrivent is basically claiming that they will have to completely overhaul their business structure.

Although there is not an official comment from the DOL in regard to this lawsuit, experts are curious to see if the DOL will point to statutory authority for regulating retirement accounts and whether or not they will prevail over the Federal Arbitration Act.

Although Thrivent is not the only firm dealing with this issue, it is ironic that a company that was founded and claims to operate under Christian principles is having issues with the contractual obligation to be a fiduciary. Also, the reason why the fiduciary rule and its allowable exemptions are being put into place is so firms such as Thrivent have to work in their retirement investors’ best interest. And on top of that, the fiduciary rule will help make the financial services industry a more true and honest profession, which will give investors more confidence to invest with these firms.

What are your thoughts on this case?

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