At the 5th Annual DCIIA Public Policy Forum, SEC Deputy Director David Grim delivered remarks on the initiatives of the Division of Investment Management (“IM”) regarding target date funds, money market fund reform, the variable annuity summary prospectus, the investment adviser and broker-dealer initiative, and the rollover of retirement plan assets.
Director Grim stated that target date funds are a “prime example of industry innovation developed to meet the incredibly important and shifting challenge of retirement stability to American investors.” In 2010, the SEC proposed rules regarding target date funds to address concerns about investors’ understanding of those funds and, in 2013, the Investor Advisory Committee submitted a set of findings and recommendations relating to target date funds. In response, Director Grim stated that the Division of IM’s staff is currently preparing a request soliciting additional comments on a standardized risk-based glide path illustration for target date funds.
Regarding money market fund reform, Director Grim mentioned that, along with the first set of reforms in 2010, the SEC proposed additional reforms in June 2013 that were designed to “lessen money market funds’ susceptibility to heavy redemptions, improve their ability to manage and mitigate potential contagion from high levels of redemptions, and increase the transparency of their risks” while preserving their benefits. The proposal included two principal alternative reforms: (i) a floating NAV and (ii) allowance of the use of liquidity fees and redemption gates in times of stress. Director Grim stated that the staff is currently reviewing comment letters on the proposal, noting that adopting final rules on money market mutual funds is a critical priority for the SEC in 2014.
Director Grim also mentioned that the Division of IM is working on potential reforms to variable annuity disclosure. Even so, he noted, it is a challenge to boil down long and complex disclosure about variable annuities into the key facts that investors need to know about the limitations, costs and benefits of investments.
Additionally, he explained, Chair White has directed the staff to evaluate potential options available to the SEC regarding the investment adviser and broker-dealer initiative, including a uniform fiduciary standard for broker-dealers and investment advisers when dealing with retail customers, as well as other measures.
Director Grim briefly mentioned that colleagues in the OICE National Exam Program have indicated that, in keeping with their examination priorities for 2014, they will undertake initiatives related to the rollover of retirement plan assets.
See: Director Grim’s Speech.