A new opinion piece in The Hill claims that reinstating the DOL’s Conflict of Interest Rule, more commonly known as the Fiduciary Rule, would limit access and choice and hit underserved communities hardest.
The piece, from Mario H. Lopez, president of the Hispanic Leadership Fund, “a public policy advocacy organization that promotes liberty, opportunity, and prosperity for all Americans,” takes aim at recent regulatory efforts involving lifetime income options (annuities) that he argues sidestep the Fifth Circuit Court of Appeals’ decision to vacate the rule in 2018.
“Preferring a decentralized approach, he mentions the 18 states that have passed laws and regulations so far …”
Lopez writes that the government would tilt the playing field away from commission-based advisors and “toward the type of financial planners that typically only the wealthy can afford.”
“Commission-based financial professionals tend to have low- to middle-income clients—people not always comfortable investing their hard-earned money in the stock market who prefer safer, more stable financial products such as annuities that commission-based professionals offer,” he adds.
He cites his organization’s research that finds reinstating the rule would “reduce the retirement savings of 2.7 million individuals with incomes below $100,000 by $140 billion over 10 years. And it would increase the wealth gap by a staggering 20 percent for Hispanic and Black Americans.”
Preferring a decentralized approach at the state level, he mentions the 18 states that so far have passed laws and regulations requiring financial professionals to act in consumers’ best interest when offering recommendations about annuities.
“Many more are considering similar actions. And the Securities & Exchange Commission enacted its Regulation Best Interest in 2020, establishing a best-interest standard of conduct for broker-dealers when they make a recommendation to retail customers.”
Lopez concludes by noting COVID-19’s personal and financial toll and his concern that the Department of Labor might again create harsh regulations for low- and middle-income families.
“We should be finding ways to make it easier for working families to create and build wealth—and the evidence shows that a fiduciary-only approach is the exact wrong policy to adopt.”
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.
