New Post-Implementation Data Indicates Investors Are Worse Served
The U.S. Chamber of Commerce today released new research that shows the harmful, unintended consequences of the Department of Labor’s fiduciary rule.
In an effort to monitor the impact of the rule on investors and those saving for retirement, the U.S. Chamber conducted a survey of industry participants that included 14 financial advisory companies collectively responsible for nearly $10 trillion in assets across 26 million investment accounts. The survey results shed light on the actions firms have taken to implement the rule, as well as the practical consequences those actions have had on retirement savings investors.
Financial advisory companies are taking a range of actions in response to the fiduciary rule that have limited access to advice, including: eliminating products, shifting from transaction-based models to fee-based models, increasing fees, and setting account minimums.
The survey shows that, even from a limited universe, already more than 13 million total accounts have lost or now have limited access to financial products and services, while 6 million total accounts are facing the prospect of reduced advice or higher fees. More than 4 million accounts have already had to be moved into a different service not requested by the investor.
As a result, survey respondents said unanimously that investors will be worse served by the full implementation of the fiduciary rule. They also indicated that small-dollar investors would bear the brunt of the rule’s impact.
“The negative impact on investor choices and access to good retirement advice, especially for smaller accounts, is even more dramatic than we expected,” said David Hirschmann, president and CEO of the U.S. Chamber’s Center for Capital Markets Competitiveness. “Now that implementation has begun, this data shows that the fallout we feared is real and widespread. From escalating orphaned accounts to dramatically reduced investment options, the reasons to delay and fix this rule are piling up. This is concrete evidence that the fiduciary rule is a step in the wrong direction that will only expand our nation’s saving crisis. It’s time for the DOL, the SEC, and Congress to take this information to heart and act to protect the millions of financial futures that depend on more choices and readily available retirement advice.”
The new research will be the subject of a panel discussion at the U.S. Chamber’s event, “Fiduciary Duty: Assessing the Real World Impact.” The event will be streamed live online here.
“The fiduciary rule, as this survey shows, is having a concrete, real-world impact on retirement savers, and change is sorely needed,” said Randy Johnson, senior vice president for Labor, Immigration and Employee Benefits at the U.S. Chamber. “The 18-month delay on the rule is a good start, but there’s a lot of work to be done before we arrive at a fiduciary rule that works for the everyday American retirement saver. We look forward to continued productive conversations across the stakeholder spectrum as we aim to help carve the clearest path toward retirement as possible.”
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