As deadline looms, Trump team must delay fiduciary rule
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Working with a financial advisor is critical to achieving a dignified retirement. People who work with a financial advisor save more money, get better returns on their investments, avoid costly mistakes and have greater confidence in their financial futures. In fact, retirement savers who worked with an advisor had nearly 60 percent more money after four to six years, compared to those who invested on their own.

However, in a few months, many investors will only be able to receive limited access to retirement advice from their financial advisors due to the new regulations from the Department of Labor (DOL). 

Fiduciary Rule Harms Retirement Savers


Due to the rule’s increased compliance costs, low and middle-income investors will be forced out of their preferred model for investing and into robo-advice or no advice at all. A robot doesn’t know a client’s retirement goals, fears, or whether an emotional investment decision he or she may be about to make could jeopardize his or her retirement security.


Robo-advisors cannot provide individualized advice with respect to the life events of their clients. Financial advisors offer their skill and expertise to help clients navigate major financial pressures imposed by medical concerns, bankruptcy, deaths in the family and caring for aging family members.

The rule would also expose even the best financial advisors, who care deeply for their clients, to class action lawsuits. Because the rule imposes costly, complex and confusing requirements, compliance with the rule will become extremely complicated and expensive. These requirements will result in increased consumer costs that will limit the services available to many low and middle-income investors and greater liability exposure for financial advisors.

Taking Action before April 10

Earlier this month, President Trump issued a memorandum instructing the DOL to examine the rule to determine whether it may adversely affect the ability of Americans to gain access to retirement information and advice.

We applaud President Trump and his administration for working to secure a delay of the rule, allowing more time for the DOL to review the rule’s workability, and we strongly encourage the DOL to delay the rule well before its April 10 implementation date.

On April 10, the definition of fiduciary investment advice will apply and firms will begin transitioning existing accounts to Best Interest Contract (BIC) exemption accounts. This will require the drafting, printing, distribution and collection of signed best interest contracts from millions of retirement clients. Once signed by the client, these contracts will become immediately enforceable in a court of law.

As a result, delaying, or even repealing, the rule after BIC exemption agreements are signed will have no impact on the firm and financial advisors’ contractual obligations created by their efforts to comply with the BIC exemption. Without a delay, firms and financial advisors are now incurring tremendous cost in preparing accounts for the BIC exemption.

Eventually, they will reach the point of no return as firms and financial advisors are forced to begin the process of obtaining client signatures on the contracts during the transition period. Therefore, we call on the new administration to take immediate action to delay this unworkable rule.

Protecting Access to Affordable Financial Advice

A delay in the rule’s implementation would be a very important development because the rule’s vagueness and challenging requirements make it impossible for firms and advisors to comply by the April 2017 deadline. In fact, it is almost certain that investment product sponsors will be unable to introduce levelized commission products (a necessity under the rule) available for sale by the deadline. 

The delay would be a step in the right direction toward repealing a rule that creates overlapping regulations, imposes substantial and ill-defined compliance obligations, greatly increases costs and liability exposure on firms and financial advisors, and, most importantly, harms small investors who will see an increase in costs, reduction in service and loss of access to advice and products.

FSI has supported a best interest standard for all financial advisors since before Dodd-Frank became law. Ultimately, we believe the rule should be repealed and that the SEC, as directed by Dodd-Frank, should create this rule. We stand ready to work with the administration to put in place a best interest standard that protects investors, while not denying quality, affordable financial advice.

At a time when so few Americans are adequately saving for retirement, our elected officials should be doing everything possible to provide more incentives to save, not making it harder. The Department of Labor fiduciary rule will not only make it harder, but impossible, for many hard-working Americans to access critical retirement advice.


Dale Brown is president & CEO of the Financial Services Institute (FSI), an association for independent financial advisors.

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