President Barack Obama will speak Monday at AARP at 2 PM to officially say that he has given the Department of Labor the go ahead to move forward with the redraft of its rule to amend the definition of fiduciary under the Employee Retirement Income Security Act.
Obama will say in his comments that he has directed DOL to move forward with its redraft "to protect families from bad retirement advice by requiring retirement advisers to abide by a 'fiduciary' standard—putting their clients’ best interest before their own profits," according to a copy of his prepared remarks.
"Middle class economics means that Americans should be able to retire with dignity after a lifetime of hard work," according to a copy of his remarks to be released by the White House. "But today, the rules of the road do not ensure that financial advisers act in the best interest of their clients when they give retirement investment advice, and it’s hurting millions of working and middle class families.
"A system where Wall Street firms benefit from backdoor payments and hidden fees if they talk responsible Americans into buying bad retirement investments—with high costs and low returns—instead of recommending quality investments isn’t fair. These conflicts of interest are costing middle class families and individuals billions of dollars every year," the White House press release states.
The White House will also release today its new report from the President’s Council of Economic Advisers showing that "the current, broken regulatory environment creates misaligned incentives that cost working and middle class families billions of dollars a year—with some individual families losing tens of thousands of dollars of their retirement savings."
After receiving fierce opposition to its first proposal in 2010, DOL pulled it in September 2011 and began revising it.
In a Jan. 13 internal memo to senior White House advisors, Jason Furman, chairman of Obama’s Council of Economic Advisers, said that the redraft “represents a middle ground,” and that he agrees with DOL that the current regulatory environment allows brokers to give “conflicted” advice, which costs retirement savers more than $6 billion a year.
Securities and Exchange Commission Commissioner Daniel Gallagher argued Friday at the SEC Speaks conference in Washington, however, that DOL’s rule to amend the definition of fiduciary on retirement accounts is a “runaway train,” and that the recent White House memo supporting release of the redraft is “thinly veiled propaganda designed to generate support for a widely unpopular rulemaking.”
SEC Chairwoman Mary Jo White said Friday at the same event that she would speak about her position regarding an SEC rule to put brokers under a fiduciary mandate “in the short term,” stating that it remains a priority of hers “to get the Commission in a position to make that decision” on such a rule.
She said the SEC has been providing "technical assistance" to DOL on its fiduciary rulemaking.