The Latest Fiduciary Delay Will Cost Participants How Much?

It's a significant increase from previous estimates

401k, fiduciary, Department of Labor, retirementU.S. Capitol. Washington , D.C.

What’s a few billion dollars between (fiduciary) friends?

Left-leaning Economic Policy Institute estimates the Trump administration’s proposed 18-month delay of key provisions of the fiduciary rule will cost retirement savers $10.9 billion over 30 years.

It’s an increase in estimates from July, when EPI estimated further delays in full implementation of the DOL’s Conflict of Interest Rule would cost retirement plan participants $7.3 billion over the same period.

This was on top of the $7.6 billion it estimated delays already put in place by the Trump Administration will cost participants over the same period.

In the latest comment letter submitted to the Department of Labor on September 11, EPI Policy Director Heidi Shierholz strongly opposed any further delay of the rule, and urged the DOL to allow the rule to go fully into effect as scheduled.

“Delaying this common-sense rule will cost working people who are saving for retirement billions of dollars—dollars that will end up in the pockets of unscrupulous financial advisers,” Shierholz said in a statement. “Anyone who wants the American people to get a fair return on their hard work should oppose this delay.”

While a little light on the math, EPI claimed that the $10.9 billion estimate assumed that, absent the full implementation of key enforcement provisions, there will be a 50 percent rate of compliance with the rule.

Shierholz’s comments provided a range from $5.5 billion to $16.3 billion, representing compliance rates of 75 percent and 25 percent, respectively.

“They are calling this a delay, but it’s a transparent attempt to weaken or kill the rule,” Shierholz added. “The financial services industry, who has been lobbying heavily for this delay, are the only ones who stand to benefit.”

Retirement savers in every state will lose money if there is a delay in the full implementation of the fiduciary rule, the institute concluded.

Losses from the additional delay, which will persist and compound long after the delay ends, range from $804.9 million in California to $10.4 million in Wyoming.

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