Coalition Tells Congress to Stop Trying to Thwart DOL Rule

Staunchly supporting the DOL’s fiduciary proposal, the Financial Planning Coalition calls out recent legislative stall tactics.

A letter from the Financial Planning Coalition (FPC) urges members of Congress to reject legislative proposals designed to stall the Department of Labor’s (DOL’s) fiduciary rulemaking. 

The letter comes a week after a statement outlining several “investor-friendly” principles that four congressional representatives contend would help to create a bipartisan legislative solution. But the FPC calls the legislation unnecessary and says it “would derail, not advance, a final rule to require retirement advisers to serve their clients’ best interests.”

The center of the FPC’s argument is that the principles cite disclosure of conflicts of interest but not the obligation to mitigate any compensation practices or incentives that give rise to these conflicts, what it calls “a fundamental component” of the fiduciary standard.

The coalition defends the DOL’s rulemaking process, calling it “comprehensive, deliberative, fully open and transparent,” as well as “extensive and robust,” not to mention taking place over “a lengthy five-year period” and says it is “working precisely as intended. Given that the FPC has approved the DOL’s intent from the beginning of this round of the fiduciary rulemaking process, the letter comes as no surprise and concludes, “We urge you to reject this or any other legislative proposal—whether stand alone or in the funding bill—that will serve to delay or defeat the promulgation of a final DOL fiduciary rule.” 

The coalition comprises the Certified Financial Planner Board of Standards, the Financial Planning Association and the National Association of Personal Financial Advisors.

NEXT: An opposing view

In contrast, the American Council for Capital Formation (ACCF), an advocate for American business, has issued a paper highly critical of the DOL’s rule. “Will Proposed DOL Fiduciary Rule Help or Harm Sound Retirement Planning?” invokes the possible unintended consequences of the DOL’s rule that “could worsen U.S. savings and retirement rates” and says the fiduciary rule as proposed may not serve the best interest of consumers.

The council says the DOL's rule would decrease retirement savings by pricing low- and moderate-income investors out of the personalized guidance and advice market. The council questions assumptions and data regarding pricing of 401(k) plan investments versus IRA investments used in a White House analysis, released in February, “The Effects of Conflicted Investment Advice on Retirement Savings.”

However, the council's paper gives more focus to “underperformance,” while the White House paper discusses “conflicting incentives.”

A link to the council’s paper is here. A link to the FPC’s letters is here.