The nation's major brokerages and insurance companies are either misrepresenting their services in their marketing to prospective clients or they're falsely representing their businesses in their court challenge to the DOL fiduciary rule, a new Consumer Federation of America report said.
A review of 25 of these firms found their websites refer to their professionals as financial advisers and other titles that create the impression that advice is the “essential service” being offered,
the 16-page report released Wednesday said. Additionally, their marketing messages aim to convince those saving for retirement that they should trust their professionals, who are looking out for the client's best interest.
At the same time, the industry groups that represent these firms are asking federal courts to throw out a Department of Labor rule that requires anyone giving retirement advice to make recommendations in a clients' best interest. They claim it should not apply to the firms they represent because their professionals are mostly selling investment products and “are not engaged in relationships of trust and confidence with their clients,” the CFA report said.
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“Are they lying to the court, or are they lying to their customers?” asked Barbara Roper, the group's director of investor protection. “The answer to that question has multi-billion-dollar implications for millions of American workers and retirees who turn to financial professionals for help with their retirement investments.”
Opponents of the DOL fiduciary rule, which applies strictly to retirement advice, believe the rule will lead to higher compliance costs and litigation risk, even causing many financial professionals to abandon some smaller retirement accounts.
The Securities Industry and Financial Markets Association, one of the industry groups
suing to stop implementation of the DOL fiduciary rule, criticized the report's assessment and said it believes the Securities and Exchange Commission, not the DOL, should create such a standard.
“SIFMA has long supported a best-interest standard for broker-dealers across all retail investment accounts, not just retirement accounts,” SIFMA president Kenneth Bentsen Jr. said in a statement. “None of the arguments made in our meritorious lawsuit against the DOL suggest otherwise.”
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Another opponent of the DOL rule and a party to the legal challenge, the Financial Services Institute, said it also remains focused on advocating for a uniform fiduciary standard of care that works for clients, advisers and firms.
“The 'report' fails to acknowledge the fact that the overwhelming majority of our members have been dually registered for decades, therefore working as fiduciaries,” said Chris Paulitz, spokesman for the Financial Services Institute.
For its part, the Labor Department posted
a 16-page document on its website last Friday laying out questions investors should ask their financial advisers to determine if they are a fiduciary.
The rule will take effect on April 10.
