Obama Continues DOL Fiduciary Debate with Veto

June 13th, 2016

Obama Continues DOL Fiduciary Debate with Veto

Subject:  Market Transparency & Individual Accountability

Summary Analysis: 

This week, President Obama vetoed a resolution passed by Congress to amend the Department of Labor’s (DOL) definition of “fiduciary” according to the Employee Retirement Income Security Act (ERISA).  The definition was amended by recent rules placing new restrictions on financial advisors providing retirement investment advice to limit conflicts of interest and ensure that advisors act in the best interest of their clients.

In his veto, President Obama wrote that in the absence of regulations, “some firms have incentivized advisers to steer clients into products that have higher fees and lower returns.”  Republican opponents, however, argue that the DOL’s rule will raise the costs of seeking professional retirement advice. The legislative battle follows a global regulatory trend to examine the suitability of financial products and services for seniors, which includes regulators such as the Consumer Financial Protection Bureau (CFPB) and the Financial Conduct Authority (FCA).