The White House unveiled their plan to direct the Department of Labor to unveil a new fiduciary standard rule that will curb the conflict of interest and excessive fees that the White House says that mars 401(k) and IRA investing.
This is nothing new, except a new renewed push to get brokers up to the same standards that registered investment advisors (RIAs) have to follow. Hebrew National always touted their frankfurters had to answer to a higher authority than the USDA because they were kosher and RIAs always had to answer to a higher standard because they were fiduciaries. Let’s not panic because it will be months before the DOL comes out with a proposed rule. So it will give time for everybody to get ready for rulemaking and then the fighting as a result.
Why the fighting? It’s not the first time the DOL will propose a rule on the fiduciary standard. It’s going to be whether the DOL can withstand the pressure of Wall Street political interest money that will influence Congressional leaders from both sides of the party to fight it. That is why the DOL withdrew their first proposed change a few years back.
The Wall Street attack will be severe and will get Congressional leaders stating that the fiduciary standard for all 401(k) investment professionals will increase costs because many broker-dealers will withdraw from the marketplace. They said the same thing about 401(k) fee disclosures and how it would make plan sponsors ditch their 401(k) plans which didn’t happen. Will the DOL withstand the attacks and the Wall Street propaganda this time? Your guess is as good as mine.