The U.S. Chamber of Commerce, the nation’s largest business trade group and outspoken opponent of the Department of Labor’s fiduciary rule, has issued a report stating that the DOL underestimated the negative effects of the rule, particularly in reducing access to advice for small retirement savers and small businesses.
The report, which is titled “The Data Is In: The Fiduciary Rule Will Harm Small Retirement Savers,” is a compilation of survey statistics and other data that was submitted by various organizations during the recent DOL comment period, the Chamber says.
“The theoretical academic exercises underlying the rule are giving way to hard evidence, and the evidence is coming in showing that the rule is harming American investors,” said the Chamber. “This new data, based on actual experience, demonstrates that the DOL’s original predictions were wrong.”
Highlights include the following:
The report says that retirement services will become more expensive and service fees could increase by 200 percent.
92 percent of firms surveyed say that the rule could limit or restrict investment products for their customers, which could ultimately effect some 11 million households.
A survey of insurance service providers shows 70 percent already have or are considering exiting the market for small balance IRAs and small plans, and half are preparing to raise minimum account requirements for IRAs.
A survey of advisors finds 71 percent will stop providing advice to at least some of their current small accounts due to the risk and increased costs of the rule.
Other surveys found that 35 percent of advisors will stop serving accounts under $25,000, and 25 percent will raise their client minimum account thresholds.
The DOL recently announced that the fiduciary rule will become applicable on June 9th while the agency seeks additional public comment on the regulation that attempts to reduce conflicts of interest in retirement investment advice and redefines who is considered an investment advice fiduciary under the Employee Retirement Income Security Act of 1974. According to the DOL fiduciary rule, all who provide retirement investment advice to plans, plan fiduciaries and IRAs are required to abide by a “fiduciary” standard.