Today, EPI Policy Director Heidi Shierholz submitted a comment in response to a Department of Labor Request for Information about a potential delay in the full implementation of the conflict of interest rule, also known as the fiduciary rule.
The fiduciary rule protects working Americans by requiring financial professionals to act in their clients’ best interests when recommending investments to people saving for retirement. In her comment, Shierholz opposes any further delay in fully implementing the rule.
“Any delay will be enormously expensive to retirement savers—and not just during the period of the delay,” said Shierholz. “The losses that retirement savers experience from being steered towards higher-cost investment products during the delay would not be recovered, and would continue to compound.”
At the behest of financial services industry interests, the Trump administration has already acted to delay the rule, and is now working to weaken it and further delay key provisions. Shierholz estimates that the delays the Trump administration has already instituted will cost retirement savers $7.6 billion over the next 30 years. Each year of further delay will cost retirement savers an additional $7.3 billion dollars over the next 30 years.
“The only beneficiary of President Trump’s move to delay this rule is the financial services industry, which wants to continue to take advantage of retirement savers for as long as possible,” said Shierholz. “Working people trying to save for retirement need to be able to invest their hard earned savings without being fleeced.”
Before the rule went into partial effect in June, it was legal, in many cases, for financial salespeople to recommend higher-cost investment products that provide them with a higher commission but provide lower returns to their clients. If fully implemented and enforced, the fiduciary rule will eliminate the loopholes that made providing this kind of conflicted advice a widespread practice among financial advisers.
The Trump administration claims that delaying the rule will give it time to determine whether the rule would adversely affect the ability of Americans to gain access to retirement advice. This is a thinly-veiled tactic to kill or weaken the rule and allow the financial industry to continue taking advantage of retirement savers.
“We have a retirement crisis in this country. We need an America where working people can get advice on how to invest what they’ve earned without being taken advantage of by the financial professionals they go to for help,” said Shierholz.