Washington, D.C. – The Financial Planning Coalition – comprising Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®) and the National Association of Personal Financial Advisors (NAPFA) – submitted a supplementary comment letter opposing the U.S. Department of Labor’s (DOL) proposal to delay the implementation of its fiduciary rule, which was approved in April 2016.
“The Coalition believes that a strengthened fiduciary rule under ERISA is essential for America’s retirement investors and is workable for advisers, and we strongly support implementation of the Department’s final rule,” the group wrote, adding: “The Coalition opposes any modification or repeal of the final rule that would prevent its prompt implementation and thus prevent the Department from taking critically needed steps to enhance protections for retirement Investors.”
The Coalition’s letter concluded: “We urge the Department to refrain from modifying or repealing the Final Rule and promptly begin its implementation.”
The fiduciary rule, which establishes critical safeguards for retirement investors, was scheduled for implementation on April 10. If approved by DOL, the implementation of the fiduciary rule will be delayed until June 9, which will lead to more potential harm to consumers, and continue unnecessary confusion in the financial services industry. The letter asserts that:
- The Department’s rushed reconsideration process contradicts the prior comprehensive process for promulgating the final rule
- The Department must ensure the regulatory impact analysis adequately accounts for investor harm
- Modification or repeal of the final rule is contrary to ERISA’s language and purpose
- The Department’s final rule meets the requirements of the presidential memorandum
The Coalition brings a unique perspective to this discussion; its stakeholders and members have committed to provide financial planning services under a fiduciary standard of conduct. The Coalition believes that requiring an Adviser to work in the retirement investor’s best interest is an essential and long overdue reform.
Washington, D.C. – The Financial Planning Coalition – comprising Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®) and the National Association of Personal Financial Advisors (NAPFA) – issued the following statement on today’s Senate Health, Education, Labor and Pension (HELP) Committee vote on the nomination of Alexander Acosta to serve as Secretary of Labor:
“Americans saving for retirement and retirees want to know: Does Secretary of Labor nominee Alex Acosta want to maintain the status quo of conflicted financial advice, or does he want to support new rules that will require financial advisors put their retirement clients’ interests first?
“With his nomination voted out of committee, the Financial Planning Coalition urges Mr. Acosta to support the Final DOL Fiduciary Rule that will protect retirement savers from conflicts of interest. Mr. Acosta has thus far eschewed direct responses regarding whether he supports the Rule. Instead, he refers to the Administration’s executive order to delay implementation until further review is complete. This position is insufficient for the millions of Americans who have entrusted advisors with their retirement savings after a lifetime of hard work, and the businesses who have recognized this important consumer preference and spent time and resources preparing for compliance.
“The Final Rule was crafted after careful deliberation and review, reflects extensive public comment, and articulates common-sense standards for ensuring financial advice in investors’ best interest. Empirical research and the Coalition’s practical experience confirm that middle income retirement investors will retain ready access to professional financial advice under a fiduciary standard of conduct, and the vast majority of financial professionals who operate under a fiduciary standard reported that the change has been positive for their clients and their own practice.”
Washington, D.C. – The Financial Planning Coalition – comprising Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®) and the National Association of Personal Financial Advisors (NAPFA) – today submitted a comment letter opposing the U.S. Department of Labor’s (DOL) proposal to delay for 60 days (Delay Rule) implementation of the DOL Fiduciary Final Rule (Final Rule) approved in April 2016.
“The Coalition believes that a strengthened fiduciary rule under ERISA is essential for America’s Retirement Investors and is workable for Advisers, and we strongly support implementation of the Department’s Final Rule,” the group wrote. “For those who truly want to strengthen retirement security and ensure that Advisers protect their clients’ best interests, allowing the Final Rule to be implemented without delay is the best way to achieve those goals. The Final Rule is fully consistent with the principles of a true fiduciary standard under ERISA. Delaying implementation of the Final Rule is unnecessary, unwarranted and will only serve to derail this long overdue reform necessary to protect and preserve Americans’ retirement savings.”
The Final Rule, which establishes critical new safeguards for retirement investors, is scheduled to begin implementation on April 10, 2016. The Delay Rule, if approved by DOL, would delay implementation of the Final Rule until June 9, 2017, cause harm to consumers, and trigger unnecessary confusion in the financial services industry. The views stated in the comment letter, which can be found here, are based on the real-world experience of the Coalition and its more than 80,000 financial professionals and other stakeholders in applying the fiduciary standard across business and compensation models. The letter outlines that:
- Delay Will Harm Consumers
When consumers seek financial advice, they face a marketplace in which it is virtually impossible to distinguish a salesperson from an Adviser or between those Advisers who are legally obligated to provide advice in their best interest versus those who are not. Retirement investors lose $1.4 billion every month ($2.8 billion for a 60-day delay) due to conflicts of interest and they need the Final Rule to be implemented to stem these monthly losses.
- DOL’s Cost-Benefit Analysis is Inadequate
The Department’s cost-benefit analysis has not met the requirements of the Administrative Procedure Act (APA) and Executive Orders, which affect the level of regulatory analysis conducted by Federal agencies.
- DOL has not provided an adequate statement of the need for the delay. The Presidential Memorandum directs DOL to modify the Final Rule if it concludes the Final Rule, among other things, is inconsistent with the new administration’s priorities. However, a statement concerning a change in priorities, without additional explanation, is not an adequate statement of need for the delay.
- In addition to not providing adequate evidentiary support for the delay, DOL fails to address multiple federal court opinions upholding the Final Rule.
- DOL has not provided a clear identification of a range of regulatory approaches.
- DOL’s Delay Rule proposal does not adequately take into account the scope of harm to investors from the 60-day delay, a critical distinction as retirement investors’ losses will be compounded over the life of the investment product.
- DOL does not adequately address how the Delay Rule may contribute to unnecessary marketplace confusion and harms companies that have acted in good faith to implement the Final Rule.
- DOL does not address how the Delay Rule is stifling marketplace innovation. Recent developments have shown how the Final Rule is transforming the way commission-based advice is offered, with enormous potential benefits for all investors, not just those saving for retirement.
- Delay is Contrary to ERISA’s Language and Purpose
The Supreme Court has repeatedly held that the validity of a regulation will only be sustained if it is “reasonably related to the purposes of the enabling legislation.” In its ruling, which upheld the Final Rule in all respects, the U.S. District Court for the Northern District of Texas reasoned “ERISA was enacted on the premise that the then-existing disclosure requirements did not adequately protect retirement investors, and that more stringent standards of conduct were necessary.”
- DOL Has Not Provided Good Cause for Immediate Delay
The Coalition contends that DOL has not provided good cause under the APA for allowing the Delay Rule to become immediately effective upon publication in the Federal Register.
- Prior Precedent is Not Applicable
Current delay is fundamentally different from previous delays of DOL rules which had been published in the Federal Register, but were not yet effective.
- Delay is Unnecessary
The Final Rule addresses concerns raised by firms, industry organizations, consumer and public interest organizations, and Members of Congress. The process worked. Many companies and organizations that were initially skeptical later stated publicly that the DOL listened carefully and responded to their concerns.
In conclusion, the Coalition wrote: “Importantly, while many Advisers seek to do what is best for their customers, others take advantage of regulatory gaps to steer their clients into high-cost, substandard investments that pay the Adviser well but eat away at retirement investors’ nest eggs over time. The Coalition believes that requiring an Adviser to work in the retirement investor’s best interest is an essential and long overdue reform. We urge the Department to move forward expeditiously with implementation of the Final Rule.”
Washington, D.C. – The Financial Planning Coalition – comprising Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®) and the National Association of Personal Financial Advisors (NAPFA) – issued the following statement on the recent court decision in support of the U.S. Department of Labor’s (DOL) ability to issue a Fiduciary Rule:
“Today the American retirement saver won an important victory in a North Texas courtroom as Chief Judge Barbara Lynn supported the Department of Labor’s position that it had the authority to issue a revised fiduciary rule that will protect millions of Americans’ hard-earned retirement assets.
In rendering her 81-page decision, Judge Lynn relied, in part, on the experiences of CFP® professionals operating under a fiduciary standard when providing financial planning services similar to that in the Best Interest Contract Exemption (BICE) as cited in the Financial Planning Coalition’s (FPC) amicus brief:
“Here, the input of amicus Financial Planning Coalition (“FPC”) is pertinent. Although FPC heard the same concerns regarding compensation when it implemented similar standards to BICE in 2008, commission-based compensation has survived, and FPC’s financial professionals continue “to serve middle-income investors using all types of  compensation models and other innovative methods.”
The Court also finds that the conditions to qualify for BICE are reasonable. FPC notes that its almost 80,000 members have since 2008 successfully operated under a regime similar to that in BICE, including a fiduciary standard, a written contract, disclosure of certain fees, costs, and conflicts of interest, prudency standards, and policies to mitigate conflicts.
The Financial Planning Coalition is gratified that the DOL prevailed in this case. We will continue to encourage the Trump Administration and Congress to avoid delay of the rule’s implementation so that the American retirement saver will benefit from investment advice in his or her best interest.”
Washington, D.C. – The Financial Planning Coalition – comprising Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®) and the National Association of Personal Financial Advisors (NAPFA) – issued the following statement on President Trump’s presidential memorandum that would halt the implementation of the U.S. Department of Labor (DOL) Fiduciary Rule:
“The Financial Planning Coalition strongly opposes the action taken today by President Trump to halt the Department of Labor’s Final Fiduciary Rule that will protect millions of Americans saving for retirement. With just two months to go before its implementation date, the President has effectively given the green light to maintain the status quo of conflicted financial advice.
By issuing this memorandum, the President is directing the Department of Labor to produce an outcome that will likely lead to either a complete gutting of this thoroughly vetted consumer protection or lead to its outright demise. Either one is a bad outcome for American retirement savers.
The Coalition applauds those firms and individuals who have already acknowledged the rule’s benefit to consumers and taken action to comply with the DOL Fiduciary Rule. Already we are seeing benefits for retirement savers in the form of lower fees, more options and firms developing additional ways to serve middle-income Americans.
While we disagree with the Trump Administration’s approach to the rule, the Coalition – which represents nearly 80,000 financial planning professionals of all business models and sizes – will continue to seek opportunities to work with the Trump Administration to support consumer-first legislation and regulations.”
Washington, D.C. – The Financial Planning Coalition – comprising Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®) and the National Association of Personal Financial Advisors (NAPFA) – issued the following statement regarding the 2016 Presidential election:
“The Financial Planning Coalition will work with President-elect Trump and the new Administration to support consumer-first legislation and regulations. This includes implementing the Department of Labor’s best interest standard that will benefit millions of retirement savers as well as the SEC’s Section 913 fiduciary standard for retail investors.”