Proponents of a fiduciary standard for IRA advisors are crying foul over a widely reported study that said such a rule would dramatically raise fees.

The study, conducted in 2011 by the consulting firm Oliver Wyman, found the Department of Labor’s proposed definition of a fiduciary would increase the cost of financial advice for IRA holders by 75% to 195%. Those costs, opponents say, will block access for more and more middle- and low-income individuals to what they call “quality” financial advice. The numbers played a key role in the debate and gave opponents of a fiduciary standard fuel for their arguments. Most recently, Sen. Rob Portman, R-Ohio, cited the study’s results in an op-ed in The Wall Street Journal in early August.

Proponents of the fiduciary rule aren’t pleased, and point to what they say is the study’s flawed methodology recently uncovered.

Barbara Roper“Part of it is just the opacity of what they are doing,” says Barbara Roper (left), director of investor protection for the Consumer Federation of America. “They released the study, and then refused to release the underlying data for further scrutiny.”

She adds that opponents claim more data is needed before a thorough debate of the proposed rule can take place, but then either won’t release said data or will control its release to the point of once again calling its legitimacy into question. Roper points specifically to what she says is selective use of fee information to exaggerate the increase if the rule were to be implemented.  

“I believe we need commission-based advice for IRAs and other investment; I am not a purist and the fact remains that people save more if they receive advice, even if it’s from a salesman,” Roper says. “But I am offended by [opponents’] tactics and intellectual dishonesty.”

But Kent Mason, a lawyer with Davis & Harman who organized the study, says he is perplexed by Roper’s charges.  

“We released the data on April 5, and it is available for scrutiny on the DOL’s website,” he counters. “It’s strange, because the central conclusions of the study, that 7.2 million people will not have access to IRAs if the rule is approved, and that 360,000 fewer IRAs will be opened each year, were never challenged. That is the core point of the study; that individuals will lose access to quality financial advice if the rule is implemented, and that was never contradicted.”

According to Phyllis Borzi, assistant secretary for Employee Benefits Security at the DOL, the rule would remove the “regular basis” and “primary basis” requirements to give added protection to both employees who participate in retirement plans and to the businesses that offer them.

In an op-ed in Pension & Investments in April, she said, “employers and participants that rely on outside financial advisers to protect retirement benefits would have greater assurance that the professional advice they receive reflects the advisers’ best judgment on what is in the plan’s interest, rather than in the adviser’s self-interest.”