Opponents say the evidence of harm to investors lies in the fact that some brokerages are changing the way they approach management of individual retirement accounts, or IRAs.
For instance, at a congressional hearing in June, public testimony shows that Philadelphia-based Janney Montgomery Scott was in the process of moving “upwards of 10,000 of [its] customer retirement accounts” to “no-advice service desks.”
“They are too small for the risks imposed by [the fiduciary rule] or too costly to place in an advisory account that would remove the supposed conflicts the [Labor Department] is trying to regulate,” said Jerry Lombard, president of Janney’s Private Client Group, in a statement given to a congressional committee on behalf of the New York-based SIMFA, which represents brokerages, banks and asset managers.
Meanwhile, the rule already has been undergoing a review, which was ordered by President Trump in February.
The rule also remains in the crosshairs of congressional Republicans. Last month, a House committee approved a measure that would repeal the fiduciary rule and replace it with one allowing disclosures of potential conflicts of interest.
None of this sits well with fiduciary-rule advocates, who say the postponement request ultimately hurts investors.
“Unless and until [the Labor Department] sends a clear message that the rule is going to be implemented without further changes, firms are going to stall their implementation efforts, denying retirement savers the benefits of a fully enforceable best-interest standard backed by real limits on harmful conflicts [of interest],” said Barbara Roper, director of investor protection for the Washington, D.C.-based Consumer Federation of America.
Thompson, of fi360, said that while the debate rages on — potentially for an extra 18 months — the part of the rule already in place has served to enhance investor protection.
“Most investors already thought their advisor was legally required to act in their best interest,” Thompson said. “That wasn’t true until June 9. The bar has been raised.”