AFR submitted the comment letter linked and excerpted below that strongly opposes the Department of Labor’s proposal to delay fiduciary protections for retirement investors.
Like many public interest, investor, and industry organizations, AFR has commented extensively regarding the fiduciary rule and has participated in numerous meetings with DOL and other agencies over the multi-year process of study and consultation that led to the final fiduciary rule. The final rule and the process that led to it has now been upheld by three federal district courts. In contrast to the extensive and time-consuming analytic and consultative work leading up to the rule, this proposal would delay the rule’s established implementation date with seemingly no clear basis beyond the new Administration’s desire to reverse the final rule.
The proposal makes a speculative appeal to unspecified “frictional costs” of implementing the rule and then having it reversed in the future, a step which would lead to “two major changes in the regulatory environment” rather than one. This is a bit of circular reasoning thinly disguised as an analytic justification. The Administration’s desire to overturn the rule cannot itself serve as the justification for delaying the rule. The promulgation of this rule, including its implementation date, under the protocols of the Administrative Procedure Act involved thousands of hours of work by both DOL employees and by outside organizations such as AFR, which invested extensive effort in commenting on the details of rule proposals. It makes a mockery of these requirements to simply postpone the rule’s implementation date without a clear policy justification.
As the DOL itself admits in this proposal, the extensive analysis done to support the fiduciary rule clearly demonstrates that a delay would create costs to investors many times higher than the benefits accrued to industry from delaying their compliance with the rule. Based on savings in only one market segment and making highly conservative assumptions about the rule’s impacts, the proposal states that a sixty day delay would have present value costs to investors of at least $890 million over a ten year horizon. Examining a broader market segment and a thirty year time horizon, the Economic Policy Institute has calculated costs to investors of $3.7 billion for a sixty day delay. Both of these estimates dwarf the estimated reduction in compliance costs of $42 million over a sixty day delay.
Unless it believes that gains in industry profits should be valued at a far higher level than costs to ordinary families saving for retirement, the DOL must reject any delay of this rule.