Lawsuits Won’t Stop DOL Fiduciary Rule, Perez Says

Indeed, Rep. John Delaney, D-Md., stated in comments at the event that with DOL’s final rule, “the private economy will embrace the standard because they have to, and many of them have been doing that already, and they will innovate around providing solutions that meet the standard and make customers happy and are low cost.”

Delaney said he sees two events unfolding: “The existing players … will adopt this rule, make changes to their business models as needed, and they’ll work hard to keep every one of their customers because one of biggest costs that financial services companies have are what’s called customer acquisition — meaning the money they spend for customers,” he said. “So why in the world would any of the companies stop serving any of these customers that they’ve invested a huge amount of money in? I just don’t buy into this idea that they’ll stop serving these customers.”

Second, Delaney said, “we’re also going to see new innovation.” Right now, “there are people in conference rooms with white boards, entrepreneurs and investors charting out new businesses to build to provide this level of service.”

At press time, supporters and opponents of DOL’s rule were busy wading through the voluminous final rule, which is available on the Federal Register’s website.

Rep. Ann Wagner, R-Mo., who sponsored the Retail Investor Protection Act, bipartisan legislation passed in the House that would require the Securities and Exchange Commission, not DOL, to take the lead on crafting a fiduciary rule, said Wednesday that she was “working closely with House leadership and members of the Education and Workforce Committee on using the Congressional Review Act to stop [DOL’s] ill-advised rule.” Like other detractors, Wagner said she worries that DOL’s rule “will only hurt those it claims to protect, jeopardizing the ability for millions of low- and middle-income Americans to receive sound investment advice.”

Sen. Ron Johnson, R-Wis., chairman of the Senate Homeland Security and Governmental Affairs Committee, said in a statement that he was “disappointed” that DOL issued its fiduciary rule, “despite widespread concern about the rule’s complexity and the harm it may do to low- and middle-income investors.”

Johnson released in February a report titled “The Labor Department’s Fiduciary Rule: How a Flawed Process Could Hurt Retirement Savers,” which stated that the DOL “disregarded concerns and recommendations” from SEC staff regarding its fiduciary rulemaking.

Two main industry trade groups opposed to DOL’s rule — the Financial Services Institute and the Securities Industry and Financial Markets Association — said Wednesday that they would spend the coming days analyzing the rule.

DOL’s “two earlier proposals were complex and unworkable,” said FSI President and CEO Dale Brown. “As we have said since day one, there is no compelling evidence this rule is necessary to achieve a uniform fiduciary standard, and DOL’s own analysis fails to make the case.” Brown said FSI would analyze the rule “to determine if it protects Main Street investors by preserving their access to affordable, objective financial advice delivered by their chosen financial advisor.”

Ken Bentsen, SIFMA’s president and CEO, stated that as with DOL’s prior proposal, “this final rule is voluminous and every word matters,” adding that it will take time to review the rule to determine “its impact on investors and their ability to save for retirement.”

While SIFMA “has long supported a best interest standard for all advisors, … we remain concerned that the DOL’s rule could force significant changes to current relationships, which may leave clients without the help they need to prepare for retirement, at a time when we all agree that more can and should be done.”

— For more coverage, check out ThinkAdvisor’s DOL Fiduciary Compliance page.