DOL Delays Fiduciary Rule
In February, President Trump signed an executive order instructing the Department of Labor (DOL) to review the Obama Administration’s misguided Fiduciary Rule that imposes a one-size-fits-all standard to retirement advisors. Following the order, the DOL has officially delayed implementation of the rule until the beginning of June.
Originally slated to go into effect this month, the rule holds financial advisors to a new and heightened “fiduciary” standard as opposed to the current “suitability” standard under the guise of better serving investors. While this sounds harmless, in reality, financial advisors are by definition putting their clients’ interests first to stay in business, without a costly and archaic dictate from the federal government.
Regardless, President Trump’s instructions for the DOL to evaluate the rule highlight the exact consequences this overreach could have. The recent delay gives the Trump administration time to study whether or not this costly standard-dreamt up by progressive regulators-reduces Americans’ access to sound financial advice, negatively affects the industry, or leads to an increase in litigation for advisors.
This federal-government-knows-best approach, to fix a non-existent problem, would cost $31.5 billion and burden firms with tens of thousands of additional paperwork hours. Given that financial advisers are already regulated, Heritage Foundation expert Norbert Michel explains, “it’s not at all clear forcing this standardization on the industry is necessary.”
As the Trump administration spends the next 60 days examining the burden this rule places both on the financial industry and the average American’s search for retirement advice, it’s worth remembering the federal government need not micromanage consumer investment decisions. The fiduciary rule does far more to insert bureaucrats into yet another area of life than protect Americans from an advisor’s supposed conflict of interest.