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February 25, 2015 at 06:06 AM
Wall Street reacted Monday just as might be expected to President Obama’s endorsement of the Department of Labor’s new fiduciary standard, warning it could unleash a host of unintended consequences.
Consumer interest groups, labor organizations and other supporters of the DOL’s bid to expand the rule predictably embraced it.
Here’s a collection of those voices, from both sides of the debate:
Brian Graff, executive director of the National Association of Plan Advisors
“People should be protected from unfair and deceptive practices, but all indications are that this rule will block Americans from working with the financial advisors and investment providers they trust simply because they offer different financial products — like annuities and mutual funds — with different fees. This rule could even restrict who can help you with your 401(k) rollover.”
Knut Rostad, president, Institute for the Fiduciary Standard
“The Institute for the Fiduciary Standard applauds the president’s forceful statement stressing the urgency of enforcing centuries-old fiduciary law. Conflicts of interest harms’ are clear and rightly the focus of the DOL rule. The opportunity is also clear. It is to re-imagine all financial advice as objective and truly reflecting what is best for investors. Tens of millions of Americans who are relying on their retirement accounts demand no less.”
Sen. Orrin Hatch, R-Utah, Chairman of the Senate Finance Committee
“It is concerning the administration is moving forward with this rule after little to no consultation with congressional tax leaders. Because IRAs are tax-preferred savings accounts and not employee benefit plans, any new fiduciary rules regarding IRAs should be drafted by the Treasury Department. After all, it is the Treasury’s responsibility to enforce the tax code, not the Labor Department.”
Kenneth Bentsen Jr., president and CEO of the Securities Industry and Financial Markets Association
“While we cannot comment on a proposal we have not yet seen, we have ongoing concerns that the DOL regulation could adversely affect retirement savers, particularly middle-class workers.”
As the process moves forward, “OMB must consider all of the facts, including the fact that the brokerage industry is highly regulated” by the Securities and Exchange Commission and the Financial Industry Regulatory Authority, “including with respect to retirement accounts, and in particular, recent guidance by FINRA with respect to rollovers.”
Joint statement from the AARP, AFL-CIO, AFSCME, Americans for Financial Reform, Better Markets, Consumer Federation of America and Pension Rights Center
“By all accounts, the Department of Labor has engaged in a thorough economic analysis and careful deliberations. We hope and expect that once the rule is finalized, it will move all Americans closer to a decent, financially secure retirement.”
The new regulation, Bentsen said, “could limit investor choice, cause inconsistencies as different regulators would apply different standards to the same retirement accounts, prohibit access to investor guidance, and raise the costs of saving for retirement.”
