Sen. Elizabeth Warren, D-Mass., told Acting Labor Secretary Edward Hugler today that financial firms back the investment-advice rule whose implementation he is likely to delay as part of a review ordered by President Donald Trump.
In a letter to Mr. Hugler, Ms. Warren said 21 firms have responded to her Jan. 19 letter in which she challenged 33 firms that have started to implement the regulation to resist Trump administration efforts to stop it.
“Their overall message was clear: This rule is good for workers saving for retirement and companies are prepared to meet the compliance deadline,” Ms. Warren wrote. “Frankly, delaying implementation of this rule would be a slap in the face to the companies that have invested, in good faith, for a deadline that has stood for the past year — and to the everyday worker deserving of the assurance that their retirement adviser is working in their best interest.”
On the other side of the Capitol on Tuesday, Republicans and Democrats on the House Financial Services Committee clashed over the DOL rule and Mr. Trump's directive.
In her letter, Ms. Warren quoted support for the essence of the rule — which would require financial advisers to act in the best interests of their clients in retirement accounts — from nine letters she received, including those from Vanguard, BlackRock, Wells Fargo and Commonwealth Financial Network.
She also quoted 14 letters that indicated firms were well on their way to meeting the initial April 10 compliance deadline.
“We have spent several months and invested considerable financial resources preparing to implement the new DOL rule,” Charles Schwab & Co. wrote. “As of today, we are confident we would be ready to comply with the rule by the April 2017 deadline.”
LPL Financial wrote: “With the DOL rule now in final form, we have committed our resources to implement the processes, procedures and technology necessary for compliance.”
Ms. Warren sent her letter to Mr. Hugler to provide him with “new information” as he begins to conduct an assessment of the regulation's impact on investors and firms that Mr. Trump mandated in a Feb. 3 memo to the agency.
Although Mr. Trump's directive did not delay the measure's implementation date, Mr. Hugler is expected to seek a delay in order to conduct the review. That analysis could result in the agency modifying or rescinding the rule.
Mr. Trump's action responded to concerns expressed by financial industry trade groups that the rule is too complex and costly and will lead to investors with modest assets being priced out of the advice market.
Proponents of the rule say it is necessary to protect investors from conflicted advice that results in inappropriate high-fee products that erode savings.
The debate spilled over into a House Financial Services Committee meeting on Tuesday.
Rep. Maxine Waters, D-Calif., and ranking member of the panel, offered an amendment to the committee's oversight plan that would require the Securities and Exchange Commission to “harmonize” its own fiduciary rule for retail investment advice with the DOL measure. It's unclear whether the SEC will propose such a regulation.
During the committee markup, Ms. Waters derided Mr. Trump's directive on the DOL rule as “an attempt … to give his Wall Street cronies an additional opportunity to kill the rule.”
Republicans on the committee countered that the DOL rule would harm small investors. Rep. Ann Wagner, R-Mo. and a leading critic of the DOL rule, called it “Obamacare for retirement investors.”
“As of April 10, millions of Americans trying to save for their future are going to lose their broker,” Ms. Wagner added.
Rep. Bill Huizenga, R-Mich. and chairman of the capital markets subcommittee, said, “The DOL is criminalizing giving advice.”
But Rep. Gwen Moore, D-Wis., echoed Ms. Warren's letter, when she responded that the DOL rule would protect investors and the industry's actions are making it a reality.
“This rule has been adopted by the industry, and they are already implementing it,” Ms. Moore said.
Ms. Waters' amendment was headed toward defeat on Tuesday afternoon.