Lower- And Middle-Income Workers Will Lose Access to Professional Financial Advice
WASHINGTON, D.C. – President Joe Biden today proposed a rule to impose new requirements on financial professionals that will needlessly cause millions of lower- and middle-income workers to lose access to the financial advice they need to help prepare for retirement, according to the Insured Retirement Institute (IRI).
The proposed rule, according to IRI, doubles down on a previously failed policy and clearly runs counter to President Biden’s economic goals. The proposal is administered by the U.S. Department of Labor (DOL).
“This proposal is inconsistent and incompatible with President Biden’s stated priorities and the goal of Bidenomics to grow the economy from the middle out and bottom up by investing in all of America, empowering workers, and lowering costs for families,” said Wayne Chopus, President and CEO of IRI. “Ironically, the President is labeling this proposal as ‘retirement security,’ when it will actually worsen the existing retirement insecurity of millions of workers and retirees.”
This is the second time in less than a decade that a regulation has been proposed to treat all financial professionals who sell retirement planning products and services as fiduciaries. An attempt at a similar rule in 2016 was invalidated as arbitrary and capricious rulemaking by the U.S. Court of Appeals for the Fifth Circuit in 2018.
“This unnecessary, redundant, and harmful proposal will have a significant adverse impact on the ability of lower- and middle-income workers to access professional retirement planning assistance and affordable retirement planning products, including guaranteed lifetime income products such as annuities,” Chopus said.
A 2017 Deloitte study showed that more than 10 million smaller retirement account owners, with more than $900 billion in retirement savings, lost the ability to work with their preferred financial professionals as a direct result of DOL’s 2016 rule.
IRI communicated to DOL and the White House that there is no demonstrated need for this rulemaking due to recently enhanced federal and state consumer protection laws put in place after the 2018 invalidation of DOL’s first misguided fiduciary rule.
“IRI members and the vast majority of financial professionals who sell securities and insurance products are dedicated to acting in the best interest of their customers, as they are already required to do under the existing federal and state regulatory framework,” Chopus added.
“No evidence has been presented by the President, DOL, or any other federal agency demonstrating that this newly implemented comprehensive framework is not being enforced or working effectively to protect retirement savers,” Chopus said. “Without any evidence of deficiencies in the existing rules, it is difficult to justify this effort and the unnecessary instability it would cause for retirement plans, retirees, and savers.”
While the Biden Administration claims that the new rule is narrowly tailored, IRI believes that the rule is as sweeping as the vacated 2016 rule and dramatically expands the definition of fiduciary to include nearly all financial professionals.
Additionally, the proposal would impose unnecessary new risks and burdens on financial professionals, which will make it harder for consumers to get the help they need to plan for retirement.
Existing federal and state consumer protections laws include:
- The U.S. Securities and Exchange Commission’s Regulation Best Interest
- The fiduciary standard imposed on registered investment advisers and investment adviser representatives under the Investment Advisers Act of 1940.
- Existing DOL regulations, including Prohibited Transaction Exemption (“PTE”) 2020-02, which was adopted by the DOL in 2020
- State insurance laws and rules based on a model regulation developed by the National Association of Insurance Commissioners (“NAIC”) in 2020.
IRI says that rather than adding unnecessary new regulatory requirements on financial professionals, the President should be focused on adopting rules as necessary to fully implement the two bipartisan measures enacted by Congress in 2019 and 2022. The Administration also should work with Congress to enact additional laws that will enhance and strengthen the retirement security of America’s workers and retirees.
“The President’s attempt to impose another harmful regulation on America’s workers and retirees despite federal court rulings and evidence of its devastating consequences is inexplicable,” Chopus said. “IRI and our members will once again work to protect retirement savers from this regulatory overreach.”
# # #
Contact: Dan Zielinski
PROPOSED NASAA MODEL RULE THREATENS ACCESS TO ANNUITY PRODUCTS FOR RETIREMENT, UNDERMINES FINANCIAL SECURITY
WASHINGTON, D.C. – A state securities regulator organization has proposed a revised model rule that could have significant consequences for…
WASHINGTON, D.C. – The Insured Retirement Institute (IRI) told the National Association of Insurance Commissioners (NAIC) Special Committee (EX) on…
The Industry’s Premier Event is April 2-4 in Nashville, Tenn. WASHINGTON, D.C. – The Insured Retirement Institute (IRI) opened registration for its 2024…