CEI Comments to U.S. Department of Labor in Support of Proposed 60-Day Delay in Fiduciary Rule
Dear Sir or Madam,
On behalf of the Competitive Enterprise Institute, I am pleased to provide these comments in strong support of the Department of Labor’s proposed 60-day delay in the applicability, or compliance, date of the final rule under the Employee Retirement Income Security Act of 1974 (ERISA) that redefines the term “fiduciary” under section 3(21) of ERISA and section 4975(e) of the Internal Revenue Code of 1986. I also strongly support delaying the applicability dates of the prohibited transaction exemptions granted in connection with this rule.
Founded in 1984, the Competitive Enterprise Institute (CEI) is a non-profit research and advocacy organization that focuses on regulatory policy from a pro-market perspective. A strong focus of CEI is regulatory barriers affecting access to capital and investor choice.
CEI has strongly objected to this rule due to its likely harmful effects on middle-income savers and the entrepreneurs and employees of firms that provide them with guidance and a wide range of investment options. Enclosed are the comments that my colleague Christopher Kuiper and I – in collaboration with scholars from the FreedomWorks Foundation — submitted after the rule was proposed in 2015, along with my 2016 paper on the rule.
In our comments and in the paper, we warned that savers would lose access to financial products they feel best suit them in saving for retirement and would not be able to maintain relationships with the brokers, insurance agents, and other professionals they have chosen to service their retirement accounts. Based on press accounts, our warning already appears to be coming true as financial firms are rushing to prepare to be in compliance with this rule by the short deadline of April 10 set during the previous administration.[1]
We applaud the DOL’s decision, pursuant to President Donald Trump’s February 3 executive memorandum, to review the rule for these and other harmful effects and possibly to rescind the rule. It should go without saying that during this period of review, delaying the applicability date of the rule is crucial to lessen the harms of the rule and prevent confusion among financial professionals and savers.
We urge DOL to delay the applicability date as proposed, and to continue the delay as necessary while the rule is under review.
[1] Robert Powell, “How You Pay For Investment Advice Is Changing,” USA Today, October 12, 2016, http://www.usatoday.com/story/money/columnist/powell/2016/10/12/merrill-lynch-commissions-retirement-accounts-fiduciary/91743356/