Advocacy in action blog

The Department of Labor and the White House have released a final fiduciary-only rule after an astonishingly brief regulatory and review process and in spite of grave concerns expressed by NAIFA, members of Congress, and other stakeholders. Unless Congress or the courts intervene, the rule will force the vast majority of financial professionals offering retirement planning services and products into a fee-for-service model. It will deprive consumers of the valuable option of working with professionals operating under alternative models that may better meet their needs.

NAIFA continues efforts to discourage the Department of Labor and the administration from moving forward with its flawed fiduciary-only rule. In a letter to DOL Acting Secretary Julie A. Su, Office of Management and Budget (OMB) Director Shalanda Young, and Office of Information and Regulatory Affairs (ORIA) Administrator Richard Revesz, NAIFA and 10 other groups detailed problems with the rule's regulatory process and asked the administration to "stand up for the integrity of the regulatory process and continue the public input process, rather than finalize the fiduciary rule now."

NAIFA is speaking out on behalf of financial professional and, particularly, the consumers who would be harmed by the Department of Labor's latest effort to reduce choices for Americans preparing for retirement. The fiduciary-only proposal, which is largely a rehash of a rule struck down by a federal appeals court in 2018, would radically change the financial services industry and reduce the ability of low- and middle-income retirement savers to access products and services.

The Department of Labor’s (DOL’s) current efforts to revive a fiduciary-only regulation for financial professionals is unnecessary and likely to harm low- and middle-income consumers by limiting their access to professional financial services, National Association of Insurance and Financial Advisors (NAIFA) CEO Kevin Mayeux, CAE, told officials from the Office of Information and Regulatory Affairs (OIRA) of the White House’s Office of Management and Budget (OMB).

“By moving forward with the Proposed Rule, OIRA and DOL are ignoring … the real-world experience that NAIFA members saw first-hand before the 2016 Fiduciary Rule was vacated,” Mayeux said. “If finalized, the Proposed Rule will again force financial professionals to move away from brokerage services into a fee-for-service model that is tailored to higher-income clients. This model simply does not work when a year-round fiduciary duty is imposed.”

“NAIFA is pleased with the U.S. House panel’s decision to repeal the DOL’s independent contractor rule removing confusion and uncertainty resulting from the final rule and preserves the ability of our members to choose to operate as independent contractors. The majority of NAIFA’s members – insurance producers, broker dealer representatives, and/or independent registered investment advisors – are independent contractors who help generate economic growth and financial security to the local communities they serve across the nation.

NAIFA CEO Kevin Mayeux, CAE, issued the following statement in response to the U.S. Department of Labor’s decision to advance its proposed “Retirement Security Rule” for review by the White House Office of Management and Budget (OMB).

NAIFA wholeheartedly supports a best interest standard for retirement investment professionals, but believes the Department of Labor's proposal to impose a fiduciary-only regulation goes too far, NAIFA Secretary Chris Gandy wrote in letter submitted to be part of the official record of a recent House Subcommittee on Health, Employment, Labor, & Pensions hearing entitled "Protecting American Savers and Retirees from DOL’s Regulatory Overreach.”

When it comes to preparing for retirement, having choices matters. Congress, in recent years, has passed landmark legislation encouraging Americans to invest in their futures and save for retirement while giving them greater flexibility and more planning options. Now more than ever Americans need retirement planning assistance.

NAIFA members in a recent survey overwhelmingly said that the Department of Labor’s fiduciary-only proposal for retirement planning services would increase the costs of serving clients. That sentiment is borne out on a macro level by a new Financial Services Institute study conducted by Oxford Economics, which found that the rule would cost financial services firms $2.7 billion in the first year with continuing annual costs of $2.5 billion. These figures are more than six times the upfront costs and nearly 11 times the ongoing costs estimated by the DOL.

NAIFA appreciates the work of a bipartisan group of federal lawmakers who oppose the Department of Labor’s proposed “Retirement Security” rule that would require a fiduciary-only model for financial services.

Representatives French Hill (R-AR) and David Scott (D-GA) and forty-eight of their colleagues in the House signed a letter to acting DOL Secretary Julie Su and Assistant Secretary Lisa Gomez asking the Department to withdraw its proposal.