President Donald Trump last
month delayed a new rule that would require financial advisors to act
in their clients’ best interests when they steer them toward retirement
plans. Congressional Democrats warned Friday that the administration was
considering killing the rule for good before even doing its own
analysis.A group of Senate Democrats said in a letter they sent Friday to Labor Secretary Alexander Acosta that they were alarmed by claims from a retirement advisors’ lobby that he had made stifling the so-called “fiduciary rule” a “number one priority.” The American Retirement Association reported last week that Acosta had said he was looking to “freeze the rule” in a way that would “stick.”
Sens. Patty Murray (D-Wash.), Elizabeth Warren (D-Mass.) and Cory Booker (D-N.J.) noted in their letter to Acosta that Trump himself had ordered an updated “economic and legal analysis” of the rule before anything happens to it.
“Instead of meeting with all stakeholders and considering multiple points of view, you appear to have prejudged the outcome of the review your agency was tasked with conducting,” they wrote. “In fact, it seems as though you have already arrived at your decision.”
The fiduciary rule was a major regulation that former President Barack Obama issued in 2015. Until it goes into effect, the financial advisors who help people with 401(k) plans and retirement accounts are not legally obligated to act in their clients’ best interests the way many other financial advisors are. That gives them the leeway to steer clients toward high-fee investments even if those aren’t necessarily the best products under the circumstances.
Warren and other
Democrats say the fiduciary rule will save consumers billions of
dollars a year by removing a clear conflict of interest for the
advisors. But Wall Street groups have fought the regulation ever since
it was conceived, and the new White House halted it before it could go
into effect in April as planned. A member of Trump’s economic council
had lobbied against the rule on behalf of Fidelity, one of the country’s largest investment managers, before joining the White House.
The new implementation date for the fiduciary
rule was pushed back to June, though Senate Republicans have asked
Acosta to push back the rollout even further.
Warren grilled Acosta over the rule during his confirmation hearing in March, trying to pin him down on his plans for it. “Will you protect workers saving for retirement from financial advisors who would cheat them?” she asked him in a long back and forth.
Acosta wouldn’t indicate where he stood on the rule, saying only that he would follow Trump’s orders to review all regulations currently on the books.
This article originally appeared on HuffPost
Lisa Lambert,ETF.com
15 hours ago
Washington (Reuters) – Three U.S.
Democratic senators on Friday raised concerns over the possibility that
President Donald Trump's administration will permanently shelve the
"fiduciary rule," aimed at preventing brokers from recommending
inappropriate retirement investments.
The most senior Democrat on the Senate committee overseeing pensions, Washington's Patty Murray, and two of the party's liberal stars who advocated for the rule, Cory Booker and Elizabeth Warren, wrote to newly confirmed Labor Secretary Alexander Acosta about reports that he was looking for a way to freeze the rule and make it "stick."
Seeking Long-Term Freeze?
Earlier this month, the National Association of Plan Advisors cited Acosta as saying he was seeking the long-term freeze in a meeting with Republican Senator Tim Scott of South Carolina.
He added that he was in constant communication with the White House and "recognized the urgency of the situation," the group said in a blog post citing a "communication from Scott's office."
Scott's spokeswoman Michele Exner told Reuters she did not know what the two discussed in their meeting, what Acosta had said, or anything about the communication cited.
Labor Department Spokeswoman Jillian Rogers said she would ask Acosta, currently in Germany, about the conversation and if permanently paralyzing the rule was a department priority.
Putting Clients’ Interests First
Approved last year under former President Barack Obama, a Democrat, the rule was intended to ensure that financial advisors put their clients' interests first, and to protect consumers from buying unnecessary investment products that line brokers' pockets.
Heavily criticized by Wall Street and Republicans for potentially raising the cost of investment advice, the rule has faced a rocky time becoming effective, with Trump last month delaying its enactment date, originally April 10, for 60 days. Trump has also ordered a review of the rule.
"Instead of meeting with all stakeholders and considering multiple points of view, you appear to have prejudged the outcome of the review," the senators wrote in a copy of the letter seen by Reuters. They said an analysis accompanying the rule's release that found conflicts of interest would cost those saving for retirement $17 billion annually.
They warned there are "steep legal standards" that the Labor Department would have to meet to "justify further delaying, substantially revising, or rescinding this rule.
Warren grilled Acosta over the rule during his confirmation hearing in March, trying to pin him down on his plans for it. “Will you protect workers saving for retirement from financial advisors who would cheat them?” she asked him in a long back and forth.
Acosta wouldn’t indicate where he stood on the rule, saying only that he would follow Trump’s orders to review all regulations currently on the books.
This article originally appeared on HuffPost
Senators Warn About Shelving Fiduciary Rule
Lisa Lambert,ETF.com
15 hours ago
The most senior Democrat on the Senate committee overseeing pensions, Washington's Patty Murray, and two of the party's liberal stars who advocated for the rule, Cory Booker and Elizabeth Warren, wrote to newly confirmed Labor Secretary Alexander Acosta about reports that he was looking for a way to freeze the rule and make it "stick."
Seeking Long-Term Freeze?
Earlier this month, the National Association of Plan Advisors cited Acosta as saying he was seeking the long-term freeze in a meeting with Republican Senator Tim Scott of South Carolina.
He added that he was in constant communication with the White House and "recognized the urgency of the situation," the group said in a blog post citing a "communication from Scott's office."
Scott's spokeswoman Michele Exner told Reuters she did not know what the two discussed in their meeting, what Acosta had said, or anything about the communication cited.
Labor Department Spokeswoman Jillian Rogers said she would ask Acosta, currently in Germany, about the conversation and if permanently paralyzing the rule was a department priority.
Putting Clients’ Interests First
Approved last year under former President Barack Obama, a Democrat, the rule was intended to ensure that financial advisors put their clients' interests first, and to protect consumers from buying unnecessary investment products that line brokers' pockets.
Heavily criticized by Wall Street and Republicans for potentially raising the cost of investment advice, the rule has faced a rocky time becoming effective, with Trump last month delaying its enactment date, originally April 10, for 60 days. Trump has also ordered a review of the rule.
"Instead of meeting with all stakeholders and considering multiple points of view, you appear to have prejudged the outcome of the review," the senators wrote in a copy of the letter seen by Reuters. They said an analysis accompanying the rule's release that found conflicts of interest would cost those saving for retirement $17 billion annually.
They warned there are "steep legal standards" that the Labor Department would have to meet to "justify further delaying, substantially revising, or rescinding this rule.
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