Washington, D.C.— Earlier today the Department of Labor (DOL) announced that it had finalized long-awaited rules to strengthen protections for workers and retirees who turn to financial professionals for advice about how best to save and invest for retirement. Years in the making, the rules require all financial professionals to act in their customers’ best interest when providing retirement investment advice and to ensure that any conflicts of interest do not taint their advice. No longer will financial professionals, including those who oppose having to comply with higher standards of conduct, be able to talk out of both sides of their mouth, saying one thing to attract customers, then the exact opposite to evade regulatory scrutiny.

 

“Financial professionals, including most prominently insurance professionals, consistently characterize themselves as in relationships of trust and confidence with their customers who rely on their advice,” stated CFA Director of Investor Protection Micah Hauptman. “These financial professionals’ business models shouldn’t be structured to bilk those customers out of a secure and independent retirement, then evade accountability for those actions.”

 

Based on our initial review, it appears that the rule delivers on all the key investor protection priorities CFA outlined in its regulatory comment.  Accordingly, the rule is a huge win for consumers. We will conduct a more detailed analysis of the regulatory package over the coming days and weeks. While finalization of the rule is a huge hurdle, it is unlikely to be the end of the fight. Hauptman noted, “We expect industry opponents who don’t want to or aren’t capable of competing for customers based on the cost and quality of their services will try to defeat these landmark rules in both Congress and the courts, as they did the last time the DOL attempted to strengthen protections for retirement savers. This time however, the industry opponents’ efforts will not be successful.”