In a surprise to no one anywhere, a number of financial services and 401(k) industry lobbying organizations have joined together to file a lawsuit on behalf of their members to block the implementation of the Department of Labor’s final fiduciary rule.
The U.S. Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Greater Irving-Las Colinas’ Chamber of Commerce, Insured Retirement Institute, Lake Houston Area Chamber of Commerce, Lubbock Chamber of Commerce, Securities Industry and Financial Markets Association, and Texas Association of Business filed the suit on June 1 for brokers and registered investment advisors “serving Americans with Individual Retirement Accounts (IRAs) and 401(k) plans.”
Noting that the DOLs’ “creates sweeping changes that will make saving for retirement more difficult for individuals it claims to protect,” the chief executive officers of the five national association co-plaintiffs released a joint (and lengthy) statement:
“Our organizations have a long, well-documented record of support for the creation of a uniform best interest – or fiduciary – standard of customer care for financial professionals providing personalized investment advice to retail investors. The Department of Labor’s new, 1,023-page rule, however, creates sweeping changes to existing regulations that will make saving for retirement more difficult for the very same hardworking American families and individuals it claims to protect. It specifically hinders many of our member firms’ ability to continue providing the level of holistic financial advice and suitable investment options their clients are accustomed to.
“Instead of helping savers plan for retirement, the new rule will unfortunately restrict their access to affordable retirement advice and limit their options for saving. The rule will shackle Main Street financial advisors with extensive new requirements and constant liability, forcing them to limit the options and guidance they provide to retirement savers.
“Advisors servicing small business plans will similarly be left with no choice but to limit or stop servicing the retirement plans offered by those job-creators, significantly reducing the retirement savings options available to their millions of employees. These consequences collectively reinforce that government officials failed to perform an adequate cost-benefit analysis during the rule’s development.
“Our organizations are now asking a court to review whether the Department of Labor overstepped its boundaries, creating a rule that will leave Americans with fewer retirement choices, higher costs and reduced access to professional financial advice. Further the ‘private right of action’ mechanism creates significant new legal risk for financial advisors, who will face the threat of class action lawyers challenging their every move.
“This lawsuit is necessary to prevent the Labor Department from exceeding the authority that was assigned to it by Congress. More importantly, it will protect retirement savers and our member firms, who are committed to their financial futures.”