Want to stop the Labor Department from implementing its “best interest” rule on retirement advice? Then elect Donald Trump as the next president of the United States, said the sponsor of doomed legislation that would itself kill the rule.
Rep. Phil Roe, R-Tenn., told a gathering of mutual fund company representatives in Washington that his own resolution under the Congressional Review Act, which gives Congress 60 legislative days to block a regulation after it has been released in final form, does not have enough support to overturn a promised veto from President Barack Obama. The House of Representatives approved that bill along party lines late last month.
He said the best hope of dismantling the DOL fiduciary rule lies with the election of a Republican president in November. A new agency head as early as January 2017 could redirect the remaining details of the rule's implementation, which isn't fully required until Jan. 1, 2018.
“I think there's a great chance to overturn some of this stuff” if Mr. Trump is elected president, Mr. Roe said in a lunchtime speech at an Investment Company Institute meeting convened to assess the DOL rule.
If presumed Democratic nominee Hillary Clinton is elected, nothing about the rule will change, he said.
Earlier in the day, Timothy Hauser, a DOL deputy assistant secretary, told attendees the agency will consider making changes to the rule if problems arise during implementation.
Mr. Roe said he regrets that companies cannot wait until after the election to begin reforms that will be needed to comply with this rule, which he described as “a solution looking for a problem.”
Of course, Mr. Roe is assuming Mr. Trump opposes the DOL fiduciary rule. The billionaire businessman hasn't come out and said what his position is on this issue, and he's known for being wildly unpredictable.
Mr. Trump's campaign failed to return repeated calls in recent months asking for the candidate's stance on the DOL rule. Ms. Clinton has said she backs it.
Democrats support the measure, which was championed by Mr. Obama himself, because they expect it to prevent advisers from putting their own interests in earning high commissions and fees over clients' interests in obtaining the best and cheapest investments for their retirement nest eggs.
Most agree all the players in the $25 trillion retirement services market will have to adjust their operations and procedures to comply with the rule.
Mutual fund companies are expected to change their product offerings for advisers who use them to populate individual retirement accounts and other qualified accounts. Specifically, a move toward lower-cost, passive investments is expected.
Mr. Roe, an obstetrician who has delivered 5,000 babies, also promised to pursue legislation if he's re-elected in November that would set up retirement savings accounts for every child at birth.
He would seek to create an $8-million-a-year program to essentially start an IRA with $2,000 in it for every child born in the U.S. †
“Start an IRA at birth, so that at 65 you have basically solved the problem,” said Mr. Roe, who chairs a subcommittee of the Education and Workforce Committee that oversees retirement plans.