Washington, D.C. - November 28, 2017 (The Ponder News) -- Department of Labor (DOL) issued a final rule extending the applicability of the full protections of the conflict of interest (fiduciary) rule by a full year and a half, from January 1, 2018 to July 1, 2019. The fiduciary rule was initially set to take effect in April 2017, but was delayed following a directive by President Trump early in the year. After examining the rule, Labor Secretary Alexander Acosta announced in May that the rule would not be delayed further and would take effect in January 2018. This announcement means the rule – which was originally announced in 2015 – will not be implemented until July 2019.
The Save Our Retirement (SOR) coalition issued the following statement in response:
“This action is effectively a repeal of the fiduciary rule’s most critical provisions – the provisions that ensure the rule is effective and enforceable and that financial advisers and their firms are accountable for providing the best interest advice retirement savers both want and need. DOL claims it is simply delaying the full implementation and enforcement of the fiduciary rule by 18 months, but delay implies these provisions will become applicable in the near future. However, the Trump Administration has made clear its goal is that these most critical provisions never become applicable. Instead, the Administration’s intent is to use this time to permanently dismantle key elements of the rule.
“The Trump Administration’s actions prove that it is far less interested in protecting investors from the harmful effects of conflicts of interest than it is in catering to Wall Street interests. This rule is only as strong as its ability to be enforced. By stripping out the rule’s private enforcement mechanism, and by stating that the Department won’t enforce the rule, the DOL has rendered the rule toothless. This is exactly what the industry rule opponents wanted – a best interest in name only standard that leaves the broker-dealer, insurance, and mutual fund industry free to continue draining retirement savers’ hard-earned money with impunity. This outcome is especially troubling, since many firms in the adviser industry have embraced the rule and were fully prepared to comply by January 1st.”
U.S. Senator Cory Booker (D-NJ) also commented, “Today’s decision means that those financial advisors more concerned with their bottom line than with helping customers will now have 18 more months to ignore new consumer-friendly rules that protect Americans’ retirement savings from bad investment advice and hidden fees. This new delay is on top of a six-month delay in enforcement of the conflict of interest rule announced earlier this year.
“Enough is enough. It’s time to finally enforce these rules and ensure that every financial advisor prioritizes their clients' interests over their own.”
Senator Booker has been a leading voice in the effort to implement the consumer safeguard. In February 2015, he joined President Obama and Senator Elizabeth Warren at AARP’s headquarters to announce the new rule and the enormous impact it would have on families saving for retirement. When it was signaled earlier this year that the rule might be scrapped, Booker publicly pressured the Labor Department for months, sending several letters to the Labor Secretary and penning an op-ed with Senator Warren explaining why the rule was so important to Americans saving for retirement.
See more headlines at The Ponder News Web Site
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Showing posts with label fiduciary. Show all posts
Showing posts with label fiduciary. Show all posts
Tuesday, November 28, 2017
Saturday, July 22, 2017
Further delaying full implementation of the fiduciary rule will cost retirement savers $7.3 billion
EPI Policy Director Heidi Shierholz submitted a comment in response to a Department of Labor Request for Information about a potential delay in the full implementation of the conflict of interest rule, also known as the fiduciary rule.
The fiduciary rule protects working Americans by requiring financial professionals to act in their clients’ best interests when recommending investments to people saving for retirement. In her comment, Shierholz opposes any further delay in fully implementing the rule.
“Any delay will be enormously expensive to retirement savers—and not just during the period of the delay,” said Shierholz. “The losses that retirement savers experience from being steered towards higher-cost investment products during the delay would not be recovered, and would continue to compound.”
At the behest of financial services industry interests, the Trump administration has already acted to delay the rule, and is now working to weaken it and further delay key provisions. Shierholz estimates that the delays the Trump administration has already instituted will cost retirement savers $7.6 billion over the next 30 years. Each year of further delay will cost retirement savers an additional $7.3 billion dollars over the next 30 years.
“The only beneficiary of President Trump’s move to delay this rule is the financial services industry, which wants to continue to take advantage of retirement savers for as long as possible,” said Shierholz. “Working people trying to save for retirement need to be able to invest their hard earned savings without being fleeced.”
Before the rule went into partial effect in June, it was legal, in many cases, for financial salespeople to recommend higher-cost investment products that provide them with a higher commission but provide lower returns to their clients. If fully implemented and enforced, the fiduciary rule will eliminate the loopholes that made providing this kind of conflicted advice a widespread practice among financial advisers.
The Trump administration claims that delaying the rule will give it time to determine whether the rule would adversely affect the ability of Americans to gain access to retirement advice. This is a thinly-veiled tactic to kill or weaken the rule and allow the financial industry to continue taking advantage of retirement savers.
“We have a retirement crisis in this country. We need an America where working people can get advice on how to invest what they’ve earned without being taken advantage of by the financial professionals they go to for help,” said Shierholz.
The fiduciary rule protects working Americans by requiring financial professionals to act in their clients’ best interests when recommending investments to people saving for retirement. In her comment, Shierholz opposes any further delay in fully implementing the rule.
“Any delay will be enormously expensive to retirement savers—and not just during the period of the delay,” said Shierholz. “The losses that retirement savers experience from being steered towards higher-cost investment products during the delay would not be recovered, and would continue to compound.”
At the behest of financial services industry interests, the Trump administration has already acted to delay the rule, and is now working to weaken it and further delay key provisions. Shierholz estimates that the delays the Trump administration has already instituted will cost retirement savers $7.6 billion over the next 30 years. Each year of further delay will cost retirement savers an additional $7.3 billion dollars over the next 30 years.
“The only beneficiary of President Trump’s move to delay this rule is the financial services industry, which wants to continue to take advantage of retirement savers for as long as possible,” said Shierholz. “Working people trying to save for retirement need to be able to invest their hard earned savings without being fleeced.”
Before the rule went into partial effect in June, it was legal, in many cases, for financial salespeople to recommend higher-cost investment products that provide them with a higher commission but provide lower returns to their clients. If fully implemented and enforced, the fiduciary rule will eliminate the loopholes that made providing this kind of conflicted advice a widespread practice among financial advisers.
The Trump administration claims that delaying the rule will give it time to determine whether the rule would adversely affect the ability of Americans to gain access to retirement advice. This is a thinly-veiled tactic to kill or weaken the rule and allow the financial industry to continue taking advantage of retirement savers.
“We have a retirement crisis in this country. We need an America where working people can get advice on how to invest what they’ve earned without being taken advantage of by the financial professionals they go to for help,” said Shierholz.
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