One of the policies under attack is the U.S. Department of Labor (DOL)’s fiduciary rule, which was finalized on April 16, 2016, and is scheduled to take effect on April 10, 2017. The fiduciary rule requires retirement investment advisors to put the customer’s interests first, rather than provide conflicted advice to make bigger commissions and profits for advisors, insurance companies, and Wall Street firms. The DOL went through a lengthy and thorough rulemaking and public comment process in which the industry and consumer groups, including Woodstock Institute, participated. Nevertheless, the administration issued a memo on February 3, 2017, that directs the DOL to “review” the rule and prepare an “updated economic and legal analysis” including: whether the rule has harmed or is likely to harm investors by reducing access to advice; whether anticipated applicability of the rules has resulted in disruptions within the industry; and whether the rule is likely to cause an increase in litigation or prices related to retirement investment services. The memo further directs the DOL that if it finds the rule is “inconsistent” with the new administration’s priorities, it “shall publish for notice and comment a proposed rule rescinding or revising the rule….”
The U.S. Chamber of Commerce challenged the fiduciary rule in a federal district court in Texas, raising a long litany of claims about why the fiduciary rule should not be upheld. In a sweeping and thoughtful 81-page decision issued on February 8, 2017, the judge considered and rejected each claim and upheld the DOL fiduciary rule. This is a huge victory for workers and retirees who stand to receive better advice and save billions more dollars in their retirement accounts if the fiduciary rule is implemented.
The fight is not over, as the new Secretary of the DOL could still act to rescind the rule, but the Texas decision creates a great factual and legal record on which to rely in continuing to resist any legislative or regulatory attempts to stop the fiduciary rule from taking effect. Congressman Randy Hultgren of Illinois’ 14th District is a co-sponsor of H.R. 355, the so-called “Protecting American Families’ Retirement Advice Act,” which would delay implementation of the fiduciary rule for two years. Representative Hultgren’s contact information for offices in Illinois and Washington, DC can be found here.
Meanwhile, a growing number of industry leaders and companies have stated publicly that they have embraced the fiduciary rule and spent millions of dollars changing their systems to comply with the new rule. Failure to implement the rule as scheduled would be a giant step backwards and would significantly harm workers and retirees as well as responsible industry leaders who have already adapted to the new rule.
Woodstock Institute encourages people to let their Members of Congress know that they strongly support the fiduciary rule and oppose any efforts to delay, weaken, or rescind it.