Phyllis Borzi, assistant secretary of Labor for DOL’s Employee Benefits Security Administration, refused Thursday to concede that the fiduciary rule she championed and fought so hard to see passed would be defeated by the incoming Trump administration.
“We know that once these market forces have been unleashed, we’re not really going back to the old days,” Borzi said during remarks at the Consumer Federation of America’s financial services conference in Washington.
“I’m not going to speculate on what a future administration would do, but I will say this: The customer-first principle that’s embodied in this rule has already taken hold in the marketplace, and companies are not going back; they are going to continue to move in that direction. The speed at which they move may vary depending on what happens, but I’m not going to conclude that this rule is going away.”
Borzi, who will depart her position along with Labor Secretary Thomas Perez, challenged audience members to continue asking detractors of DOL’s rule to mitigate conflicts of interest in the retirement advice market, to answer one question: “Whose side are you on?…Force people to answer that question,” she said. “There’s only one possible answer.”
Labor’s fiduciary rule, six years in the making, “is already effective,” Borzi said, noting its first set of principles take effect in April. “It’s a really, really, really important rule,” she said, acknowledging that Perez was her secret weapon in getting the rule across the finish line.
She reiterated the fact that during the rulemaking process, DOL “met overwhelmingly” with the rule’s opponents. But, she continued, “We knew this [rule] was the thing to do. We knew that it would require lots of changes in business models that had been well-established for decades.”
She added: “Are there unintended consequences and changes we could make to make it better? Of course.”
Barbara Roper, CFA’s director of investor protection, noted Borzi’s tenacity in seeing the fiduciary rule through. “She wasn’t going to quit because it was hard,” Roper said in introducing Borzi.
In separate comments to ThinkAdvisor, Roper, a champion of Labor’s rule, said: “We understand that the rule is fighting for survival, but I don’t take for granted that we’ll lose that fight, particularly because firms are so far along in compliance. Even if the rule is overturned, it still will have an impact on the way firms run.”
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