The U.S. Department of Labor (DOL) recently tripled down on its attempt to resurrect its “fiduciary rule” that deals with how investors receive and pay for advice from financial advisors. The regulation would severely hamper the ability of millions of Americans to save for their retirement.
HLF filed an amicus brief in the case brought by the Federation of Americans for Consumer Choice (FACC) to invalidate the latest DOL fiduciary rule. The amicus brief strongly supports invalidation of the new fiduciary definition and a stay of the effective date of the definition so that the rule does not go into effect.
DOL raised eyebrows with the new push for the rule because its previous attempt in 2016 was invalidated by a federal court—a rare fate for a federal regulation given the high legal bar that must be met for such court action. That failure points to just how specious DOL’s arguments have been.
In the wake of the Department’s 2016 rule fiasco, HLF published in-depth research to detail both the effects of the rule and analyze what would happen should the fiduciary rule be somehow reinstated.
Our study shows that reinstating the fiduciary rule would reduce the accumulated retirement savings of 2.7 million Americans with incomes below $100,000 by approximately $140 billion over 10 years. The losses would be even more dire for certain segments in underserved communities. The fiduciary rule would result in a roughly 20% increase in the wealth gap for Black and Hispanic Americans—and that only considers accumulated IRA savings. Americans trying to save for their nest egg and build a financial future for their families stand to suffer financially.
DOL has spent most of the last decade zealously pursuing its fiduciary rule regulation and has repeatedly failed.
In addition to the 2018 rebuke by a federal court, in 2020 DOL moved to resurrect part of the 2016 fiduciary rule by sneaking it in via a preamble to a different federal regulation. That action was also partially invalidated by a court challenge and may be completely invalidated in a second court challenge in the Fifth Circuit. HLF filed an amicus brief in that case as well.
Stunningly, in their eagerness to rewrite duly established law passed by Congress, the Department of Labor continues to ignore the financial harm to lower- and middle-income Americans, as well as the illegality of their actions.
Given that the new, 2024, rule is virtually identical to what DOL attempted in 2016, we are confident that the legal challenge to it will be successful.
