One of the key financial protections created for consumers in recent years is the Department of
Labor (DOL) Fiduciary Rule, set to go in effect in April. The rule widens the scope of investment
professionals handling employee retirement plans who are subject to the fiduciary duty to act in
the best interests of their retirement benefit clients and put those clients’ interests above their
own. With the expanded scope of the Fiduciary Rule, small businesses will be able to provide
better retirement plan options to their employees who would be receiving investment guidance
held to the same standard of diligence as that provided by investment advisers who charge a
separate fee for their services. But this increased protection for businesses and their employees
is under fire and recently released statements indicate efforts to delay and even block the rule.
Such a move would serve the interests of large investment houses and banks while hurting
businesses and employees.
Recent Statements on the DOL Fiduciary Rule
On February 3, the Trump administration released a public memorandum to the Secretary of the
Department of the Labor to review the DOL Fiduciary Rule based on the stance that the rule
“may significantly alter the manner in which Americans can receive financial advice, and may
not be consistent with the policies of my Administration.” The statement goes on to state that the
DOL should revise the rescind the rule if, after a review of the rule, the DOL determines that:
● the Fiduciary Duty Rule has harmed or is likely to harm investors due to a reduction of
Americans’ access to certain retirement savings offerings, retirement product structures,
retirement savings information, or related financial advice;
● the anticipated applicability of the Fiduciary Duty Rule has resulted in dislocations or
disruptions within the retirement services industry that may adversely affect investors or
● the Fiduciary Duty Rule is likely to cause an increase in litigation, and an increase in the
prices that investors and retirees must pay to gain access to retirement services
The acting secretary of the DOL then released a statement saying it would “consider its legal
options to delay the applicability date as we comply with the President’s memorandum.”
Why Revising or Rescinding the DOL Fiduciary Duty Rule is Bad
The banks and large investment houses have long opposed the DOL Fiduciary Rule because
they understand that it will mean there will be increased scrutiny with how they use the
investment funds that both employees and employers contribute to in order to build solid and
stable retirements for workers. While one federal official recently belittled the DOL Fiduciary
Rule as a “solution in search of a problem,” anyone who has witnessed the ongoing Wall Street
scandals of the past several decades understands that stripping away oversight of financial
professionals handling other people’s investment funds is a recipe for disaster.
The DOL Fiduciary Rule does not place complicated regulatory burdens on investment
professionals who profit off handling employee retirement funds but rather places a common
sense standard of service on those professionals, similar to standards already placed on
advisors who service the investments of wealthier Americans. Holding investment professionals
to the standard that they should seek to place their own interests before that of their clients (e.g.
by disallowing the placement of trades that primarily benefit themselves, such as through high
commissions, over their clients’ interests) and require them to act in those clients’ best interest
is a simple and effective way to protect our nation’s businesses and their employees. Thus there
is no reason to delay the implementation of the DOL Fiduciary Rule, and moves to do so would
benefit large financial entities at the expense of ordinary American workers.
Premier Business Litigation Attorneys in the Inland Empire
McCune Wright Arevalo, LLP is an Inland Empire business litigation firm that successfully brought a 2010 class action against Wells Fargo, resulting in a $203 million recovery on behalf of California consumers victimized by the bank’s fraudulent practices. If you have been the victim of financial fraud or are facing any business litigation matters, contact our office today at 909.572.8019 or take a few minutes to fill out the online form located here .