Press Releases

Subcommittee Examines the Impact of the DOL Fiduciary Rule on the Capital Markets


Washington, July 13, 2017 -

The Subcommittee on Capital Markets, Securities, and Investment held a hearing today to examine the impact of the DOL fiduciary rule on the capital markets. The primary focus of the hearing was to discuss the unintended consequences of the DOL fiduciary rule on the U.S. capital markets, the need for that rule to be delayed, and that the Securities and Exchange Commission (SEC) must act as the lead agency on this best-interest standard issue moving forward.

“Now, more than ever, sound financial advice has become critical for every individual looking to invest and save for their future.  Every day, millions of Americans are working to achieve financial independence by using an investment adviser or a broker-dealer to help them plan and prepare for a prosperous retirement,” said subcommittee Chair Bill Huizenga (R-MI). “However, the Department of Labor’s complex fiduciary rule not only fails to protect consumers, it harms them by driving up costs and limiting investor choice.“

Key Takeaways from the Hearing:

  • The Department of Labor’s fiduciary rule will raise costs, and reduce access to retirement advice for Americans with low and middle incomes. It is creating an excessively complicated and increasingly burdensome regulatory environment, which ultimately will only benefit plaintiff’s attorneys.
  • The rule must be delayed in order to prevent further disruptions to the capital markets and access to retirement advice for low and middle income Americans.
  • The SEC is the expert regulator when it comes to the U.S. capital markets, the market participants and the products in which they sell.  Broker-dealers should be subject to a “best interest” standard as proposed in Ms. Wagner’s bill, and the SEC should be the regulator responsible for implementing and enforcing such standard.

Topline Quotes from Witnesses:

“However well-intentioned it may be, the DOL’s Fiduciary Regulation poses a very real threat to the financial well-being and retirement security of working Americans. It is difficult to overstate the magnitude of that threat. The continued availability of what today is taken for granted – a vibrant and competitive marketplace for insured retirement solutions, readily available access to cost effective financial advice and true consumer choice about how to pay for that advice – is seriously jeopardized under the DOL’s approach.” – Mark Halloran, Senior Director, Head of Industry and Regulatory Strategy, Transamerica

“When the fiduciary rule was finalized in 2016, it was (and still is) the most expensive regulation that year, with $31.5 billion in total costs and $2 billion in annual burdens on the companies – many of which are small businesses – and advisors it affects. Although the rule has not yet been fully implemented, research from the American Action Forum (AAF) has found that several major companies have already left part of the brokerage business or are drawing down their business and/or switching to a fee-based arrangement. From these companies alone, reported compliance costs have already topped $100 million, affecting 92,000 investment advisors, $190 billion in assets, and at least 2.3 million consumers.” – Douglas Holtz-Eakin, President, American Action Reform

“This Draft Bill achieves this necessary uniform standard of care by establishing the standard of conduct for broker-dealers and their registered persons when providing recommendations to a retail customer. The recommendation must be in the customer’s best interest and reflect reasonable diligence, care, skill, and prudence. The Draft Bill also empowers the SEC to issue additional regulations with regard to the standard of care. The SEC has unique expertise in regulation of broker-dealers and investment advisers as evidenced by numerous studies the SEC has conducted as required by Congress since its inception and, unlike the DOL, has the ability and authority to examine for compliance with the standard and bring corrective actions when necessary. By establishing this standard for broker-dealers, investors will no longer have to wonder what the difference is between various financial professionals and what duty of care their financial advisors owes to them..’” – David Knock, President, 1st Global

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