The left-leaning Economic Policy Institute is throwing around big numbers in its analysis of the cost of conflicted retirement advice. It goes even further and calculates the cost of the fiduciary rule’s 60-day delay, now slated for implementation on June 9.
“The fiduciary rule will require financial advisers to act in the best interests of clients saving for retirement,” Heidi Shierholz, EPI’s Director of Policy, said in a statement. “The Department of Labor should fully implement and enforce the fiduciary rule to protect the savings of working people.”
The rule, which was supposed to go into effect on April 10, was delayed until June 9.
The Trump administration is reviewing the rule, despite what EPI notes is a “six-year, exhaustive vetting process which found that these conflicts are ‘inflicting large, avoidable losses on retirement investors.’ This delay will cost retirement savers $3.7 billion over the next 30 years.”
Annual losses overall due to a lack of a fiduciary standard cost Texans $1 billion, New Yorkers $945 million and retirement savers from midwestern states like Ohio over $700 million.
“EPI Policy Center applauds Secretary of Labor Alexander Acosta for not further delaying the rule past June 9th, however, key compliance provisions built into the rule’s exceptions have been further delayed to January 1, 2018,” the institute adds. “Moreover, the department announced that it will not enforce the rule between June 9 and January 1st. This means loopholes that allow financial advisers to take advantage of savers are not fully closed and retirement savers will continue to be harmed.”
Further, EPI said it expects new attempts to weaken and delay the rule in coming months, since the department has made it clear that it is considering proposing additional changes to the rule and delaying it beyond January 1.
EPI economist Ben Zipperer claims that the financial services industry is a sector of the economy with high wages and income while most workers’ wages have been largely stagnant for 35 years.
“It’s long past the time for a common-sense rule that requires the financial services industry not to rip off America’s working people who are saving for retirement.”
The full list and associated costs can be found here.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
