The Securities Industry and Financial Markets Association (SIFMA) wants more time to comprehensively and effectively address President Donald Trump’s Feb. 3 memorandum, which directed the U.S. Department of Labor (DOL) to update the economic and legal analysis of its fiduciary rule.
The sweeping investment-advice rule requires financial advisers to act in the best interests of their clients in retirement accounts. Financial industry critics contend it’s too costly and complex a rule, while proponents argue it protects investors from conflicting advice, high fees and, eventually, eroded savings.
DOL already pushed back the original implementation date of the rule from April 10 to June 9, but SIFMA wants more time “to allow for a proper review of the rule, consistent with” Trump’s memo, according to SIFMA comments filed April 17 with DOL.
The association does not say how much additional time it needs, however.
“Notwithstanding the industry’s longstanding and continued support for a best interest standard, SIFMA continues to believe the DOL rule will do investors much more harm than good,” Kenneth E. Bentsen Jr., president and CEO of SIFMA, said.
Specifically, Trump’s memo requested DOL determine whether the fiduciary rule was likely to harm investors, disrupt the industry or cause an uptick in litigation and the price of advice. If DOL concludes that the rule would do so, then Trump advised DOL to propose a rule rescinding or revising the regulation.
Bentsen said in a statement this week that the evidence gathered as firm have moved to implement the rule “shows the negative consequences of less choice, greater cost and increased legal liability.” Such negative consequences include limited access to services, products and retirement savings information, according to SIFMA’s comments.
For example, in 2015, “total retirement assets in plans and IRAs totally nearly $16 trillion, with more than $7 trillion held in IRAs. These accounts will be adversely affected by the rule, as retirement investors will lose the products and advisory services that are currently available to them,” the association said in its comments.
Limited access to advice will harm retirement savers seeking to maximize returns, SIFMA said, savers who work with a financial professional have more diverse portfolios and greater savings, while product choice could be limited as some financial institutions may limit investment options within certain types and sizes of accounts.
In its comments, SIFMA also addresses what it said are parts of the rule that are not practical, not capable of ready compliance, not realistic, and not consistent with other financial regulation.
SIFMA AMG, which represents U.S. asset management firms, filed comments separately April 17 and said the fiduciary rule “has already resulted in dislocations and disruptions of retirement services that are adversely affecting investors and retirees.” The group also seeks a delay beyond June 9.
That certainly would give Trump’s DOL secretary nominee R. Alexander Acosta more time to fully conduct a thorough review—but first, Acosta must be confirmed for the position in a full Senate vote. Acosta was narrowly approved in late March by the Senate Health, Education, Labor and Pensions Committee by a 12-11 vote. A date for the final vote hasn’t been set. Without a captain at the helm, it would be difficult for DOL to move forward on this rule.