August 10, 2017

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SURVEY: Labor Department Rule Harming Retirement Savers, Disrupting Marketplace

FSR strongly supports a ‘best interest standard,’ but the Rule’s overly-complicated red tape is already harming the ability of Americans to save for retirement. Without needed improvements, this could go from bad to worse.

SURVEY: Labor Department Rule Harming Retirement Savers, Disrupting Marketplace
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SURVEY: Labor Department Rule Harming Retirement Savers, Disrupting Marketplace

New survey reveals only 12% of financial professionals believe Rule is helping them serve their clients’ best interest; 75% will service fewer small accounts due to increased risk, compliance costs

 

WASHINGTON –The Department of Labor’s (DoL) Fiduciary Rule is already having a harmful effect on consumers and the ability of financial professionals to serve their clients’ best interests according to a new survey. The survey data is included in a letter the Financial Services Roundtable (FSR) submitted today to the Department of Labor following a request for information (RFI) on the Fiduciary Rule.

Additionally, although the DoL is reportedly considering an 18-month delay, FSR believes a 24-month delay is necessary to avoid further confusion and disruption to America’s retirement savers, and will allow for regulatory coordination between the DoL and the Securities and Exchange Commission, FINRA, and banking and insurance authorities.

“FSR strongly supports a ‘best interest standard,’ but the Rule’s overly-complicated red tape is already harming the ability of Americans to save for retirement,” said FSR Executive Director Eric Hoplin. “Without needed improvements, this could go from bad to worse.”

A recent survey conducted by Harper Polling only one month after the June 9th initial compliance deadline shows significant disruption to the marketplace. Only 12% of financial professionals report the Rule is helping them to serve their clients’ best interest and 33% report there has been no impact, yet those respondents still report more complicated paperwork for clients and servicing fewer small accounts. A majority of respondents (50%) report the Rule is restricting them from serving their clients’ best interests. In addition, 75% of respondents who report their typical clients have starting assets under $25K indicate they will take on fewer small accounts due to increased compliance costs and legal risks.

“Properly taking into account the market reaction that followed the adoption of the Rule, FSR believes that the Department will necessarily conclude that appropriate revisions to the Rule and the Accompanying Exemptions would create a more efficient, effective, and appropriately tailored regulation that will preserve access to advice and choice of products and services that meet the particular needs of each Retirement Investor, especially investors with modest account balances,” FSR noted in its letter.

To read FSR’s full letter to DoL, click here. To view the Harper Polling survey, click here.

 

 

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About The Author

The Financial Services Roundtable represents the largest integrated financial services companies providing banking, insurance, payment and investment products and services to the American consumer. Member companies participate through the Chief Executive Officer and other senior executives nominated by the CEO. FSR member companies provide fuel for America’s economic engine, accounting for $92.7 trillion in managed assets, $1.2 trillion in revenue, and 2.3 million jobs.

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