Secretary of Labor Thomas Perez expressed no concern Wednesday about lawsuits that have been filed to stop the agency's regulation to raise investment advice standards for retirement accounts.
“I'm very confident,” Mr. Perez told an audience at a National Press Club luncheon in Washington.
He said two factors weigh in favor of the regulation. First, the DOL conducted an “inclusive and deliberate [regulatory] process” in which it sought extensive comments and modified the rule in response to criticisms, he said.
Second, the regulation can stand on its merits, he said. It requires financial advisers to act in the best interests of clients in 401(k)s, individual retirement accounts and other qualified accounts — a standard that reflects “a fundamental principle of consumer protection.”
“We got the outcome right,” Mr. Perez said.
(More: Everything you need to know about the DOL fiduciary rule as it develops)
Financial firms and industry interest groups have
filed five lawsuits in several different jurisdictions seeking to vacate the rule and prevent DOL from enforcing it. They argue it will significantly raise liability risk and regulatory costs for advisers and force them to abandon savers with small accounts.
Proponents argue the measure is needed to reduce conflicts of interest for financial advisers who sell high-fee products that erode clients' retirement savings.
One claim that is included in several of the suits drew Mr. Perez's derision. It asserts that the best-interests contract in the rule curbs advisers' First Amendment rights by restricting when and how they talk to clients.
He said he talked about this cause of action with his siblings who are doctors.
“I called them up and said, 'If you're sued for malpractice, assert a First Amendment right to give crappy advice to your patients — see how far that goes,'” Mr. Perez said.
In his speech, he called the rule “akin to a $20 billion tax cut for working families who are trying to save for retirement,” alluding to a White House study that said investors lose about $17 billion annually due to conflicted advice.
Mr. Perez also gave a shout out to
comedian John Oliver for devoting 20 minutes to the rule on a recent broadcast of HBO's “Last Week Tonight with John Oliver.”
“Watch his show if you want to learn why this matters,” Mr. Perez said.
