The Department of Labor’s (DOL) Re-Proposed Fiduciary Rule Protects Retirement Investors



The DOL’s four decade-old fiduciary rule must be updated to protect retirement investors.

  • Over the 40 years since the DOL promulgated the current fiduciary rule under ERISA, the retirement landscape has changed drastically, with a dramatic shift from defined benefit plans to savings vehicles such as 401(k) plans, which did not exist when the rule went into effect in 1974. Often 401(k) balances are rolled over into individual retirement accounts (IRAs), which do not offer the same fiduciary protections as 401(k) plans, leaving many Americans’ retirement savings at risk.
  • Most Americans are responsible for their own retirements and depend upon financial professionals to help make important financial decisions.
  • The current fiduciary definition under ERISA includes significant loopholes that allow for the sale of financial products that may not be appropriate for the consumer. These loopholes expose American savers to advice that may not be in their best interest, resulting in projected losses between $210 billion and $430 billion over 10 years. (DOL Regulatory Impact Analysis)

The DOL’s proposed fiduciary rule secures critical consumer protections without diminishing access to financial advice for the middle class.

  • Thousands of CFP® professionals and members of the Financial Planning Association® (FPA®) and National Association of Personal Financial Advisors (NAPFA) already successfully provide fiduciary-level services to middle-income Americans.
  • It defies common sense to think that Americans will be hurt by a requirement that retirement account advice be provided in their best interest. Americans’ retirement savings efforts will only be helped when a financial adviser providing retirement plan advice is required to put their interests first.
  • Research by the Aité Group found no statistical difference in the number of middle-income, “mass market” clients served by fiduciary-level registered representatives of broker-dealers as compared to registered representatives providing non-fiduciary level services. (Survey of 498 advisors by Aité Group, June 2013)

The DOL’s proposed rule provides financial advisers and firms with the flexibility and adaptability necessary to provide fiduciary-level advice across business models.

  • Industry opponents’ claims that advisers will be driven out of business if they must comply with a best interest standard are inconsistent with CFP Board’s experience following the adoption of a fiduciary standard for Certified Financial Planner™ professionals in 2007. The number of CFP® professionals has increased by more than 30 percent since CFP Board adopted its fiduciary standard.
  • The DOL’s proposed principles-based Prohibited Transactions Exemptions (PTEs), particularly the Best Interest Contract Exemption, accommodate a range of business and compensation models, preserving choice for the retirement saver and flexibility for the adviser, while at the same time expanding fiduciary accountability under ERISA.

Congress should allow the DOL to proceed without obstruction.

  • The DOL has demonstrated its willingness to work with industry to make the rule work.
  • The Coalition, based on its collective experience with the application of the fiduciary standard to various business models, has urged the DOL to make changes in the proposed rule to make it more workable and less costly without diminishing protections for American retirement investors, including recommendations to allow sufficient time for implementation, to reduce disclosure and reporting obligations, and to offer practical suggestions for application of the Best Interest Contract Exemption.
  • A secure retirement is an essential part of American life. Fiduciary level advice to tax-preferred retirement savings will help ensure that Americans achieve that goal.