Sen. Elizabeth Warren, D-Mass., sent a letter on Thursday to 33 financial firms asking them whether they support delaying and rolling back the Department of Labor’s fiduciary rule, as the rule could suffer such a fate Monday.
The letter — which was sent to such firms as Morgan Stanley, Raymond James, Charles Schwab & Co., Fidelity, BlackRock and TD Ameritrade — comes on the heels of reports that the incoming Trump administration will seek to delay the rule, Warren said.
“As you know, the United States faces a retirement crisis,” wrote Warren, a member of the Senate Banking Committee. “With rising costs, and flat wages, it’s harder than ever for Americans to save. I think we can agree that the very least we should do is ensure investment advisor fees, commissions and kickbacks aren’t draining away the money Americans do manage to save. DOL’s rule does just that.”
“Any efforts to roll back these new protections” under DOL’s rule, Warren wrote, “will be devastating to consumers.” Also, she said, rolling back the rule would hurt the advisors and companies that have already begun implementing changes to comply with the rule, which takes effect on April 10.
Warren told the financial services firms that she’d like answers to six questions about the rule by Jan. 31, specifically, how much money they’ve spent on compliance, what steps they’ve taken to implement the rule, and if they plan to return more products to a commission-based model.
Micah Hauptman, financial services counsel at the Consumer Federation of America, told ThinkAdvisor on Thursday that “industry opponents have made no secret they want the new administration to delay ‘on day one,’” DOL’s fiduciary rule. “However, the president-elect has indicated that he doesn’t plan on taking any official administrative actions until Monday.”
Hauptman added that any “action that the industry opponents have been calling for would violate the Administrative Procedures Act.”
CFA and Americans for Financial Reform released a report on Wednesday, written by Hauptman and Barbara Roper, CFA’s director of investor protection, which scrutinizes how brokerage firms and insurance companies market their services on their website and “contrasts the practices they use to attract customers with those they use when resisting regulation as fiduciary advisors.” “Brokerage firms repeatedly, and in a variety of ways, characterize themselves as trusted advisors, while financial industry lobbyists argue in court that they are ‘merely selling a product,’” the report states.