The retirement, investment and insurance industries reacted Tuesday to the White House and Department of Labor’s proposed amendments to rules overseeing fiduciary obligations when it comes to workplace retirement plans.

The proposed amendments to the fiduciary rule—now being referred to as the  retirement security rule—affect retirement plan advisement for individual retirement account rollovers, annuities geared toward providing retirement income and investment decisions within workplace retirement plans.

On Tuesday, President Joe Biden announced the proposed amendments at a White House press briefing, tying it to his administration’s work to “crack down on junk fees” in sectors including banking, airline travel, hotel costs, internet bills and health care.

“Most financial advisers give their clients good advice at a fair price and are honest, but that’s not always the case,” Biden said. “Some advisers and brokers throw their clients toward certain investments, not because of the best interest of the client, but because it means the best path for the broker. I get it. I understand it. But I just want you to know: We’re watching.”

Biden discussed annuities in particular, noting they are designed to work like a pension plan. But he said that most American don’t know “an annuity from a schna-nnuity,” saying they are unclear, confusing and the fine print can be filled with hidden fees. 

“Right now, millions of Americans, especially seniors, are being targeted by financial advice and insurance brokers selling bad annuities that work for the broker, not for the client,” Biden said.

By Tuesday afternoon, while many in the industry were still pouring over the nearly 500 pages of proposed changes, some weighed in with early celebration or immediate rebuke of the recommendations. Some responded to the early guidance provided by the administration, while others referred to past battles over fiduciary standards that took place nearly a decade ago.

Those For

The Certified Financial Planner Board of Standards Inc., which sets standards and provides certification for financial planners, supported the proposals and called the them a necessary update to the Employee Retirement Income Security Act of 1974.

“It’s time to update the nearly 50-year-old regulatory framework under the Employee Retirement Income Security Act of 1974 (ERISA) to prevent advisers from avoiding a fiduciary responsibility even when they are functioning as, and clients are relying on them as, trusted advisors,” read the board statement. “The outdated law does not prevent advisers from taking advantage of gaps in the regulations to steer their clients into high-cost, substandard investments that pay the advisor well but eat away at retirement investors’ nest eggs over time.”

CFP Board members accompanied President Joe Biden at the White House on Tuesday when he gave remarks about the proposals, according to a spokesperson.

The American Retirement Association, an organization that supports the retirement plan industry, made a statement in support of a specific provision in the amendments that would extend ERISA protection to cover investment menu recommendations to plan sponsors—particularly small sponsors without consultants or 3(38) fiduciary advisement.

“An adviser who sells a small employer a 401(k) and has no further action (on-time interaction) with the plan or its participants is not, until this point, required to provide investment advice protection under ERISA’s five-part test,” the ARA wrote in a statement. “The [new] rule will cover advice to plan sponsors about which investments to make available as options in 401(k)s and other employer-sponsored plans.”

Brian Graff, the ARA’s CEO, said in a statement that: “The proposed rule will ensure that advice with respect to investments in small business retirement plans will always be subject to ERISA’s fiduciary standards.”

Those Against

A number of Washington-based organizations representing various parts of the financial sector came out strongly against the proposals. Many argued that the rules were unnecessary and had already been shot down via  prior federal court rulings. These organizations emphasized that further restrictions would, in their view, limit potentially useful advice and services to retirement savers, rather than help them.

The American Council of Life Insurers, an advocacy group based in Washington, argued that the proposed rule changes would negatively affect retirement savers by enforcing more stringent rules on insurance-protected income products.

“Conflating legitimate retirement costs with junk fees is a scare tactic to push regulations that will hurt Americans in need of greater financial certainty,” Jillian Froment, executive vice president and general counsel for the ACLI, said in a statement. “The proposal is out of touch with the anxieties of regular people who are worried about savings lasting through retirement, the effect of volatile markets on 401(k)s, and the high cost of living.” 

The insurance advocates noted that “traditional pensions are no longer the norm” and that guaranteed lifetime income through annuities helps savers create additional income in retirement.

“Cutting off retirement options ignores the realities of the savings gap and builds a barrier to financial inclusion,” Froment said.

Wayne Chopus, president and CEO of the Insured Retirement Institute, made similar points in a LinkedIn post, vowing to fight the proposals.

“Despite labeling the proposal as ‘retirement security’… the rule will only increase retirement insecurity and result in millions of lower- and middle-income workers and retirement savers losing access to needed financial advice,” he wrote. “IRI will fight this proposal just as we did with DOL’s 2016 poorly concocted fiduciary rule that also masqueraded as consumer protection but instead caused extensive harm.”

SIFMA, an organization representing broker/dealers, investment banks and asset managers, noted that advancements in regulation from the Securities and Exchange Commission had made the proposed changes unnecessary.

“Since the Department of Labor first proposed a change to the definition of fiduciary, the landscape has changed greatly, most notably with the introduction of the Regulation Best Interest,” Kenneth E. Bentsen, Jr., president and CEO of SIFMA, said in a statement. “[Reg] BI implemented a best interest standard that did not exist at the time of the 2015 DOL re-proposal and foundationally improved the protections in place for retirement savers.”

Bentsen said that SIFMA has “long supported best interest standard of care for brokers,” but that the standard is already in place to protect investors.

“Upon initial review, we are concerned that the Department’s newest proposal may go too far, [is] inconsistent with existing federal regulations such as Reg BI and as a result could limit access to advice and education while also limiting investor choice in advisors,” he wrote.