The DOL Fiduciary Rule – From the Opposition’s Point of View
The proposed United States Department of Labor (“DOL”) fiduciary rule has earned itself many enemies. A coalition against the rule was formed in October 2015 and is pushing hard to stop the rule from being enacted. The U.S. Chamber of Commerce and Primerica are thought to be gearing up for litigation. The DOL held two comment periods and a four-day hearing, all of which generated thousands of letters in opposition.
Opponents believe the proposed rule will significantly raise the cost of providing investment advice. Advisors will face additional burdens under the rule, and it is likely the cost of those burdens will be passed on to the client. Some opponents have suggested that the rule will prohibit small business owners from offering retirement plans for their employees.
The fiduciary rule could also dissuade clients from using advisors, and instead, drive them towards so-called “robo investment firms” such as e*trade or other online self-trading companies.
There is concern that the rule could open the door to lawsuits against advisors. Not only will clients be more tuned in to questioning their advisors, but the rule also provides clients with a private right of action for some services.
Many are wondering if the Securities and Exchange Commission will get involved and enact a similar rule that would impact all investments. There is some speculation that the SEC is currently working on such a rule.
Even with all the controversy, it is highly likely that some version of the rule will be passed this year. Contact an attorney to talk about how you can prepare.