Released: June 09, 2017

A new era of retirement investment advice you can trust!

Department of Labor’s new retirement investor protections take effect today

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Washington, DC—Today, the Department of Labor’s new “best interest” retirement advice rule will take effect. Finally, workers and retirees will be entitled to retirement investment advice that serves their best interests, regardless of who provides the advice or how they choose to pay for it. Consumer Action fought for this new rule alongside our allies in the Save Our Retirement coalition.

“The fiduciary rule for retirement accounts will help millions of savers build a more secure retirement because they will have help in avoiding costly investment products and services that are not in their best interests,” said Linda Sherry, director of national priorities at Consumer Action. “Advocacy for the rule already has resulted in positive changes in the industry and enhanced consumer awareness. But the fight to prevent erosion of retirement savers’ hard-earned assets isn’t over yet. We remain shoulder-to-shoulder with our allies to ensure the new rule is not rescinded or weakened because of politics and industry pressure to protect the huge profits involved here.”

When providing retirement advice, the new rule requires financial advisors/professionals to consider only their individual clients' best interest—and to not base recommendations on potential profits from fees or commissions. Its impact is already being felt in the brokerage industry because the rule has brought a new awareness to investors about how costs affect their returns long-term.

Unfortunately the Department of Labor made it clear that it will continue to study the rule, under a directive from President Trump, and could give into industry lobbying pressure to overturn it. Meanwhile, Congress has taken steps to attack the fiduciary rule:

• The Financial CHOICE Act, designed by GOP members of Congress to reverse numerous pro-consumer Obama-era policies, passed the U.S. House late yesterday. If passed by the Senate, it would eliminate the DOL fiduciary rule and instead require that the Securities and Exchange Commission (SEC) write a rule of its own to govern the conduct of financial advisors. Experts say that an SEC fiduciary rule would be a long time coming, if ever.
• Also yesterday, Representatives Phil Roe (R-TN) and Peter Roskam (R-IL) introduced legislation to repeal the new fiduciary rule.

Many companies are pledging to offer a fiduciary duty of care to customers even if the best interest rule is rescinded. Consumer Action advises all investors to ask their financial advisors, professionals and firms if they will adhere to the new fiduciary standard, and to switch accounts if the firms don’t plan to operate in their best interest.

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