The Obama administration caved today on an interesting new proposal to classify more of those in the swarms of service providers surrounding retirement plans as fiduciaries, a classification that would have made them accountable for their actions.
The responses from industry were predictable, and mostly involved this sort of argument:
As noted by other commenters, the Proposal as written will likely cause many attorneys, accountants and actuaries who provide their services to plans to be defined as fiduciaries. As a result of the costs of the new liability of falling under this definition, these professionals may sharply increase their fees for these services. Or many may decide it’s simply not worth the costs to provide their expertise to ERISA-covered plans, concentrating instead on segments of the financial market that serve only wealthy investors. Either way, middle-class workers in ERISA plans would lose out, as they would either be deprived of or pay much more for the skills of these professionals.
In other words, making our constituents accountable for accuracy and soundness of guidance would be unfair and unwise.
Oddly, that same logic about the perils of accountability doesn’t seem to apply to teachers.
Finally…meaningful teacher accountability means major consequences for student outcomes. Those teachers and principals whose students do well should get substantial merit pay; those who don’t should be fired. Similarly, schools that do poorly should be replaced. Without real consequences tied to performance, the results won’t significantly change. Again, resistance to this kind of accountability is always fierce.