WASHINGTON -- The Department of Labor is pushing back its timeframe for releasing a highly anticipated proposal for expanding fiduciary responsibilities for advisors who work with retirement plans.

Speaking at the Financial Services Institute's Financial Advisor Summit, Phyllis Borzi, the Labor Department's assistant secretary for the Employee Benefit Security Administration, said that her agency is continuing to revise its proposal, and that it is more concerned about getting it right than delivering it in on the previously announced schedule.

"You're not going to see anything in October because we're not finished," Borzi said. "We're trying very hard to make sure we've crossed all the T's and dotted all the I's."

Borzi did not offer a new forecast for when the fiduciary proposal could emerge, though she indicated that the department remains adamant that new rules are necessary to protect investors from advisors and brokers with conflicts of interest.

Appearing at the FSI conference, Borzi was venturing into somewhat hostile territory. The group was an outspoken opponent of Labor's original fiduciary proposal in 2010, which it ultimately withdrew to conduct a more thorough cost-benefit analysis. The new proposal will include a far more rigorous analysis of the impact of the regulations, Borzi promised.

The FSI remains wary of an expansion of fiduciary responsibilities for plan advisors, warning that the rules could amount to a ban on receiving commissions for providing advice to the more than 600,000 retirement plans that could be covered under the rules. Ultimately, the FSI anticipates that the regulations could drive many independent firms and advisors out of the retirement market, leaving millions of investors without access to affordable retirement advice.

But Borzi pushed back on the notion that an expanded fiduciary definition would result in significant new compliance costs for advisors, many of whom, she points out, currently operate as if they were bound by the fiduciary standard of providing the best advice for their clients. The rules, then, would simply codify that expectation in a bid to remove conflicts of interest from the retirement advisory sector.

"We have no interest whatsoever in reducing the availability of the advice. What we do have an interest in, however, is making sure that the advice that people give is unbiased, objective and in their interest," she said. "What I'm talking about here is accountability. You know, if you give somebody advice, you should be willing to take responsibility. ... Now, I'm not talking about being a guarantor of the advice -- what I'm talking about is making sure that the advice that you give is primarily, overwhelmingly and unassailably the best thing for that client."

Borzi also promised that there would not be an expressed prohibition against commission-based business models in the proposed rules, which will be accompanied by a set of prohibited transaction exemptions that will provide explicit regulatory cover for certain types of business activities.

"There was nothing in our original proposal and there will be nothing in this proposal that will outlaw commissions. We're just not doing it and we didn't do it before," Borzi said, adding that the intent of the relevant statute, the 1974 Employee Retirement Income Security Act, intended to enact safeguards against bad actors in the retirement market.

"ERISA doesn't regulate business models. ERISA regulates behavior. And so the impact of this regulation will be to attack the problem, or address the problem, of conflicted advice," Borzi said. "And as long as the advisor giving this advice is insulated from conflicts of interest, we're indifferent as to what business model a company or an advisor might use."

What's more, in outlining the process for advancing the rule, Borzi noted that it could undergo substantial revisions as the Labor Department collects comments from the public. The rulemaking proposal will first get a pass through the Office of Management and Budget, which will evaluate how the rules comport with the administration's overall regulatory strategy, and the extent to which other relevant agencies were given a chance to provide input. After OMB's review (which will be announced on its website), the rule proposal would be released for public comment, and Labor would hold at least one hearing on the matter, giving interested parties another chance to offer input.

"There will be plenty of time for give and take," Borzi said. "We never have the illusion that we get everything right. That's what a proposal is."

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