HLF today released an in-depth analysis of the U.S. Department of Labor’s 2016 fiduciary rule—a regulation meant to help financial services consumers by seeking to legally ensure that advisors were acting in their customers’ best interest.
But despite the self-proclaimed good intentions, the details of fiduciary rule produced a multitude of negative consequences, even in the short time that the regulation was in existence prior to it being vacated in court in 2018 by the U.S. Court of Appeals for the Fifth Circuit.
Now, the Department of Labor is sending strong signals that it intends to reinstate many aspects of its 2016 fiduciary regulation.
This paper examines the likely effects on savers, especially lower income and minority savers, of the Department of Labor resurrecting significant portions of the 2016 rule. The research and analysis was conducted by Quantria Strategies, a firm specializing in economic modeling and public policy analysis.
The paper demonstrates the harm that would hurt the very people it was intended to help. Reinstatement of the fiduciary regulation would reduce the accumulated retirement savings of 2.7 million individuals with incomes below $100,000 by approximately $140 billion over 10 years. The impact of reinstatement would be even more dire for Black and Hispanic Americans, contributing to a roughly 20% increase in the wealth gap when looking at accumulated IRA savings alone.
The Hispanic Leadership Fund is pleased to present this essential study and will work to ensure that policymakers will heed this crucial analysis and reject the reinstatement of any regulation similar to the 2016 fiduciary rule.
Read the full report.
