Following up on his criticism of the Department of Labor’s proposed fiduciary redefinition under ERISA, House Speaker Paul Ryan, R-Wis., released Tuesday a statement charging that the rule would create “more paperwork and costly recordkeeping requirements for financial planners.”
The speaker’s latest criticism, presented in the form of a typical dictionary entry, defined the rule as a “one-size-fits-all regulation from the Obama administration” that in addition to placing a burden on financial planners would also restrict “access to quality investment advice for upwards of 7 million Americans.”
On Feb. 28, Ryan referred to the proposed DOL rule when he tweeted to his 583,000 followers that “this one rule could hurt millions of middle-class savers.”
Following his dictionary theme, Ryan’s ‘example sentences’ included one claiming that both Democrats and Republicans agree that the Obama administration “should abandon” the rule and “go back to the drawing board.”
He also reiterated his support for the bills presented by fellow Republican reps. Ann Wagner (Retail Investor Protection Act), Phil Roe (Strengthening Access to Valuable Education and Retirement Support [SAVERS] Act) and Peter Roskam (Affordable Retirement Advice Protection Act, ) all of which, he said in a Feb. 28 statement, would “provide a workable alternative to the administration’s flawed proposal.”
Responding to speaker Ryan’s definition, Knut Rostad, president of The Institute for the Fiduciary Standard, wrote in an email interview that “fiduciary critics turn history and law and common sense upside down. They conclude conflicted advice is best for investors.” Rostad, who also regularly blogs for our sister site, ThinkAdvisor, charged that “if Speaker Ryan heard only 10 minutes of a fiduciary debate, he’d see why investors prefer fiduciary advice over broker sales.” Further, Rostad said that “fiduciary critics, like Export/Import Bank proponents, exemplify crony capitalism.”
Today, the Competitive Enterprise Institute made a similar reference to the DOL rule in a Web memo it published, calling the DOL rule “Obamacare for Your IRA.” Author John Berlau, a senior fellow at the CEI, said the rule would “cost middle-class savers $80 billion in lost savings,” citing a paper by what he called “center-left economists” Robert Litan and Hal Singer for Economists Incorporated titled Good Intentions Gone Wrong: The YetToBe Recognized Costs of the Department Of Labor’s Proposed Fiduciary Rule.
Berlau called on Congress to block implementation of the rule, saying DOL has wrongfully bypassed the SEC “and will reshape the investment industry — something Congress never envisioned or intended.”
In the CEI memo — The Department of Labor’s Fiduciary Rule for Dummies (But Not the Dummies They Think We Are), Berlau argues that the DOL fiduciary rule presumes that Americans are “not smart enough to make good investment decisions for their retirement” and “generally cannot distinguish good advice, or even good investment results, from bad.”
Further, Berlau argues that under the DOL rule, a fiduciary standard would be applied to a much broader range of individuals than has traditionally been the case.
“Most of the news coverage of the rule has focused on the fact that it would deem broker-dealers ‘fiduciaries,’ clashing with the SEC, which so far has declined to designate them as such,” Berlau writes. However, he says that under the DOL rule, financial professionals — even television and radio financial talk show hosts like Dave Ramsey, “who provide even one-time guidance or appraisal of investments could find themselves classified as ‘fiduciaries.’”
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