Labor Secretary Thomas Perez expressed full confidence that a regulation that would increase investment advice standards for retirement accounts would withstand fierce opposition that continues to dog the measure.
The agency released the final rule, which will require financial advisers to 401(k) and individual retirement accounts to act in their clients' best interests, at the Center for American Progress in Washington on Wednesday.
“The volume of opponents is going to shrink because they're on the wrong side of the policy and they're on the wrong side of history,” Mr. Perez told reporters on the sidelines of the rule rollout. “They're on the wrong side of the American people. They're on the wrong side of Main Street.”
The event featured Mr. Perez; Jeff Zients, director of the White House Economic Council; and seven Democratic members of Congress extoling the rule as needed protection for workers and retirees against conflicted investment advice that leads to high fees and lower savings.
“Today, the struggle for retirement security will get a little easier for millions of Americans,” Sen. Elizabeth Warren, D-Mass., said at the rollout event. “Sometimes government works for the people and today is one of those days.”
(More coverage: The DOL fiduciary rule from all angles)
While the Democrats were speaking downtown, Republicans around Washington blasted the rule for being too complex and costly and undermining the ability of middle-income Americans to save for retirement.
House Speaker Paul D. Ryan, R-Wisc., said in a statement that the House would “look at every avenue to protect middle-class families … from government overreach.”
Senate Majority Leader Mitch McConnell, R-Ky., compared the DOL rule to the often-criticized health care reform law.
“Like Obamacare, it threatens to upend an entire industry, threatens to increase costs and decrease access, and threatens to hurt the very people it's aiming to help,” Mr. McConnell said in a statement on the Senate floor.
Bills introduced in the House and Senate would halt the DOL rule. Congress also can vote to stop the rule over the next couple months. Both efforts face a veto by President Barack Obama.
Industry groups also are likely to file a lawsuit against the rule. But that doesn't faze Mr. Perez.
“I have a lot of confidence that we've come up with the right policy and we've done it in a way that will withstand legal scrutiny,” Mr. Perez said.
One way DOL has tried to tamp down criticism of the rule is by modifying it to address concerns raised by opponents.
On Wednesday, Mr. Perez reiterated the changes he outlined on Tuesday in a White House conference call.
They include major revisions to the so-called best interest contract exemption that allows advisers to charge commissions or take revenue sharing as long as they are fiduciaries to their clients. In addition, the implementation timeline was extended from eight months to more than one and a half years.
The changes still preserve an enforceable best-interests' standard, which Mr. Perez calls his “North Star.”
“We streamlined, simplified the rule while remaining true to our North Star,” Mr. Perez said.
The National Association of Insurance and Financial Advisors, an opponent of the rule, gave a nod to the changes without committing itself to supporting the measure.
“We appreciate that DOL has accepted many of NAIFA's suggestions and reworked some portions of the rule to address concerns raised during the review process,” NAIFA president Jules Gaudreau said in a statement. “We remain cautious, and it remains to be seen how the practical application of the rule will affect middle-market consumers who need retirement planning advice and services. But we are pleased to see, for example, that DOL has incorporated our suggestions on the effective date of the rule, grandfathering of existing clients, and timing of when signatures are required on best interest contracts.”
Although the DOL rule is now final, the debate likely will continue on for months. Even a Securities and Exchange Commission member weighed in Wednesday.
“I am disappointed that the rule announced today seems to ignore the chorus of voices that questioned whether it will restrict middle-class families' and minority communities' access to professional financial advice by making retirement advice unaffordable,” Republican SEC Commissioner Michael Piwowar said in a statement. “I am fearful that those concerns, which were widely and bipartisanly held, will prove to be true once the rule becomes effective.”