Today, the Labor Department is expected to release its long-awaited "fiduciary rule." Ostensibly aimed at addressing potential conflicts of interest by brokers who offer retirement investment advice, Competitive Enterprise Institute financial policy expert John Berlau warns that the government’s definition of “best interest” won't be best for people seeking alternative assets in their IRAs, from gold to peer-to-peer loans to crowdfunding. He is also concerned about the administration's talking point comparisons to Obamacare.
Statement by CEI senior fellow John Berlau
"The new Department of Labor fiduciary rule, which Obama officials have said will mandate that brokers and others only give investment guidance that serves savers’ “best interest,” will likely resemble Obamacare for your IRA and 401(k). Though the full regulation still has not been publicly released, there are troubling indications of paternalism from the previous Dept. of Labor rule withdrawn in 2011 and the Obama administration's own talking points.
"Labor Secretary Thomas Perez and White House Senior Adviser Valerie Jarrett both use medical analogies to sell the rule. "Like your doctor or your lawyer, your retirement adviser should be required to do what is best for you," Jarrett said on her LinkedIn page. Perez told reporters, "You don't want your doctor telling you what's suitable for you; you want that doctor to tell you what's best for you."
"But Jarrett and Perez don't seem to get something that informed patients and investors know well: that there is no one answer of what is "best for you" in either medicine or personal finance. And it shouldn't be up to the government to decide. Just as patients should be able to choose doctors, savers should have the freedom to weigh the potential risk and return of various investment plans. But imposing "fiduciary" liability on a broad swath of financial professionals who don't provide regular investment advice, as this new rule may do, would threaten this fundamental freedom of savers and investors."