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[Sent via email to Piacentini.Joseph@dol.gov and e-ORI@dol.gov]

Sept. 24, 2015

Mr. Joseph S. Piacentini

Chief Economist and Director of Policy and Research 

Employee Benefits Securities Administration 

United States Department of Labor

Dear Mr. Piacentini:

We received of your request of August 26th for additional information regarding the cost estimates 

contained within Deloitte’s Report on the Anticipated Operational Impacts to Broker Dealers of 

the Department of Labor’s Proposed Conflicts of Interest Rule Package.”

Below we have answered those questions we are able to answer while respecting the constraints 

under which the data for the study was obtained. Similarly to studies relied upon by the 

Department within its regulatory impact analysis, the study included underlying data that cannot 

be shared outside of the confines of the study. As you are aware, an assurance of confidentiality is 

frequently necessary to obtain parties’ agreement to participate in studies involving the analysis of 

marketplace data. 

DOL Request # 1 (a)

What are the identities of the 18 SIFMA member firms that participated in the "2015 Cost

Survey?"

As a precondition to participating in the DOL Cost Survey, SIFMA members required anonymity. 

Specifically, the survey included the following language regarding confidentiality: 

All answers provided are confidential.

SIFMA will aggregate and anonymize information your firm provides. Your 

firm’s identity will not be shared with anyone outside SIFMA. 

DOL Request # 1 (b)

Alternatively, please characterize generally how closely these firms represent, or how they

differ from, the industry at large.

As stated in the Deloitte Report: 

The surveyed firms represent a diverse business mix; including both clearing and 

non-clearing firms and range from full-service broker-dealers to smaller retail 

oriented broker-dealers. 

In figure 2.7-8, the SIFMA survey categorized the size of firms consistent with the DOL’s cost 

analysis and outlined the number of SIFMA survey respondents in those categories:
According to the estimates that the DOL included in its Regulatory Impact 

Analysis, there were a total of 2,619 broker-dealers that serve ERISA accounts or 

IRAs and would thus be impacted by the proposed Rule. The DOL’s estimate 

broke down this population as follows:

Generally, SIFMA believes that the large and medium sized firms that completed the survey are 

representative of the firms in their respective categories. As outlined in the Deloitte report, the 

surveyed firms represent a diverse business mix; including both clearing and non-clearing firms,

and ranged from full-service broker-dealers to smaller retail oriented broker-dealers. As it relates 

to small firms that completed the SIFMA survey in the context of their representation of the 

broader population of small firms, the Deloitte Report outlined the following:

[T]he Working Group chose to exclude small firms from this exercise because of 

the broad and diverse make-up of the industry’s small firm population, which the

SIFMA survey respondents may not have been representative of. In the view of 

the Working Group, while there would undoubtedly be substantial costs for small 

firms to come into compliance, their costs are difficult to assess, given the broad 

range of firm sizes and business models included in this category. 

Implementation for small firms would involve a mix of costs which are borne 

entirely by the firm itself, such as additional employees, customized legal advice, 

and system and process changes, as well changes made at the vendors and 

clearing firms who support many of their processes. The balance of these costs 

and whether costs undertaken by vendors would also be borne by small firms

remains uncertain.
DOL Request # 2

Please provide a description of the methodology used to select firms for participation in 

the survey and any other information that might assist in assessing the generalizability of 

the survey findings.

SIFMA requested members of the working group to complete the survey. The SIFMA Working 

Group is comprised of over 140 senior operations, technology, and legal professionals from 

approximately 40 SIFMA member firms whose business include providing individual investors 

with financial advice and services. Of these 40 SIFMA member firms, 18 responded to the survey. 

DOL Request # 3

Please provide any scripts, questionnaires, and/or survey instruments used to elicit 

responses from survey participants.

Please see attached. Please note, the granular start up and ongoing cost component costs (i.e., the 

non-total cost elements) were not required fields, and were not completed by many participants. 

DOL Request # 4 (a)

Please provide raw survey data in csv format. In the absence of raw survey data, please 

provide descriptive statistics, including means and ranges by firm size category, for each 

of the questions posed to respondents.

Pursuant to SIFMA’s agreement with members that completed the survey outlined above, SIFMA 

is unable to provide granular detail on survey responses beyond what was outlined in the Deloitte 

Report.

Given the sample size of responding firms, it is not possible to provide additional descriptive 

statistics, such as ranges by firm size category, without risking disclosure of the identity of a 

significant number (6) of the participants, which is inconsistent with our agreement with SIFMA 

members stated above.

DOL Request # 5 (a) 

Did the survey elicit separate estimates for costs attributable to the Proposal's various 

specific provisions?

The survey enabled, but did not require, respondent to submit separate cost estimates in the 

following categories: contract costs; disclosure costs; record keeping, retention and reporting costs; 

supervisory system and compliance costs; as well as a general category for other costs. Some, but 

not all, of survey respondents provided these more granular cost estimates. All survey 
respondents were instructed to consider the key cost components outlined in figure 2.9, below. 

DOL Request # 5 (b) 

Alternatively, did the survey elicit separate estimates for the “Key Cost Components” 

identified in Figure 2.9? If so, please provide a breakdown by cost component and firm 

size?

The following key cost components were discussed among Working Group members and are 

considered to be included in the overall start-up and ongoing cost of compliance. Pursuant to 

SIFMA’s agreement with members that completed the survey outlined above, SIFMA is unable to 

provide granular detail on survey responses beyond what was outlined in the Deloitte Report. 

Providing a further breakdown by cost component and firm size risks revealing the identity of 

survey respondents. 

Sincerely,

Kenneth E. Bentsen, Jr. 

President and CEO

SIFMA 
SIFMA DOL Fiduciary Operations - Cost Analysis

1

Non-Exclusive Considerations for Start-up and annual ongoing costs:

 information technology suppliers and vendors; 

 information technology systems, hardware and software, 

support and testing/audit; 

 outside legal counsel costs

 outside compliance consultant costs

 communications, marketing, business review and risk 

review; 

 training materials: creating, editing, and circulating new 

materials; reviewing, editing, finalizing, and publishing all 

impacted training materials; 

 training: providing training and communication to all 

impacted personnel, particularly sales and operations 

personnel; 

 reviewing and updating all existing client contracts and 

client disclosures (including documentation and delivery 

of disclosure); 

 reviewing and updating of sales surveillance tools, all 

impacted policies and procedures, including written 

supervisory procedures; 

 publishing and distributing revised policies and 

procedures; 

 reviewing, editing, finalizing and publishing all impacted 

marketing materials; and 

 updating exam test modules and instructions, training 

examiners, and executing additional testing procedures 

across all branch offices 

 other out-of-pocket costs

 employee- and staff-related costs

Small firms:

• Less than $50 million in capital

Medium firms:

• $50 million to $1billion in capital

Large firms:

• Over $1 billion in capital

Clearing firms:

• Firms who clear on behalf of 

introducing firms

Self-clearing firms:

• Firms who clear their own business, 

but do not clear on behalf of 

anyone else

Introducing firms:

• Firms who introduce accounts to 

clearing firms for clearance and 

settlement

Purpose & Assumptions Survey Target Profiles Key Cost Components

Purpose: this survey plans to obtain a 

high-level firm cost estimate of: 

(1) the total dollar amount it would cost 

your firm to build and implement the 

current DOL Proposal, and 

(2) the total dollar amount it would cost 

your firm to maintain the current 

DOL Proposal on a yearly basis. 

Assumptions: Aggregate cost including all 

sub-requirements

o Business Interest Contract Exemption

o Principal Transaction Exemption

o Fiduciary Analysis

o Other Prohibited Transaction 

Exemption Changes

• Results are based on respondents’ 

best estimates based on current 

understand of the proposed rule’s 

requirements

• Results will reflect an average of 

responses from firms of similar 

profiles, individual results will vary by 

individual firms and between various 

firm profiles

• Results should not be relied upon or 

used for purposes of budgeting and 

planning
2

High-Level Firm Cost Estimate 

DOL Proposal Aggregate Costs

Please use $#,###. format when entering costs below.

If you have the granular cost numbers, please provide. 

However, the only required responses below are the total cost fields.

Start-up-Costs Ongoing Costs/Yr.

Contract costs

Disclosure costs

Record keeping, retention and reporting costs

Supervisory system and compliance costs

Other (pencils to servers)

Total Cost (Required) $#,### $#,###