As CEOs Meet with Acosta to Lobby DOL on Fiduciary Rule, Warren Urges DOL to Consider Statements CEOs Made to Investors
Senator Also Asks SEC to Consider This Evidence in Related Rulemaking
Text of the letter to DOL (PDF)
Text of the letter to SEC (PDF)
Washington, DC - U.S. Senator Elizabeth Warren (D-Mass.) today sent a letter urging Secretary of Labor Alexander Acosta to fully implement the Fiduciary Rule, citing the earnings calls of financial and insurance companies indicating that they are prepared to comply with the rule in its current form and that many believe it to be in the best interests of their customers. In the letter, Senator Warren noted that while "...companies are required by law to accurately share all information pertaining to material matters affecting their business models or stock valuations... the same requirements do not apply to political advocacy or lobbying on this or any other topic." Senator Warren also asked Securities and Exchange Commission (SEC) Chair Jay Clayton to review this evidence as the SEC solicits public comment on rulemaking in a similar area.
Originally scheduled to go into effect in April of this year, the Trump administration delayed implementation of the Fiduciary Rule's impartial conduct standards until June 9th. Senator Warren's letter follows last week's announcement that the Department of Labor (DOL) has proposed to further delay the Fiduciary Rule's full applicability, including the Best Interest Contract exemption, from January 2018 until July 2019.
"Such a delay would endanger billions of dollars in Americans' hard-earned retirements savings, and, if you enact the delay, it would ignore the preparation and positive outlook on the rule that many financial services and insurance companies have repeatedly expressed," wrote Senator Warren. "As millions of Americans diligently save for a secure retirement, only to have their hard-earned savings squandered by conflicted advisers to the tune of $17 billion per year, workers need you to stand in their corner and fully implement this rule as soon as possible."
Although lobbyists for the financial services and insurance industries have repeatedly made alarmist claims about the rule's effects on businesses and investors, earnings calls from more than a dozen major companies held after the impartial conduct standards went into effect reveal that companies were well-prepared for the rule's implementation, compliance is not overly burdensome, and the rule was consistent with companies' goals of putting their clients' interests first. Additionally, multiple companies noted that the delays have caused a great deal of uncertainty that would only be exacerbated by further postponement of the rule's full implementation.
- "We think that the idea of, of course, doing what's in the best interest of the customer is what's kept us in business for 100 years and it's a good idea." - Lincoln Financial President, CEO, and Director Dennis Glass
- "Regarding the Department of Labor Fiduciary Rule, Ameriprise and our advisors were well prepared for the June 9th implementation...." - Ameriprise Financial, Inc. Chairman and CEO Michael Cracchiolo
- "...We implemented the first installation...And we think that actually is going to be positive overall in terms of the impact to the business divisions...." - UBS Group CEO and President of the Executive Board Sergio Ermotti
- "I do believe" that growth "has been negatively impacted by some of the uncertainty around the DOL rule, which unfortunately, to a certain extent, continues..." - Primerica CEO and Director Glenn Williams
Senator Warren also cited a new Morningstar report outlining a number of positive changes companies have already made in response to the rule, including the introduction of innovative new products that will lower fees, increase returns, and "benefit investors by reducing conflicts of interest and adding transparency."
Read a PDF copy of Senator Warren's letter to Secretary Acosta here, and a PDF copy of her letter to Chairman Clayton here.
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