Labor Assistant Secretary Phyllis Borzi said the agency's investment advice regulation is already reducing fees in the industry and will continue to do so — no matter what happens to the rule in the Trump administration.
The regulation, which requires financial advisers to act in the best interests of their clients when providing retirement advice, has led to “low-cost, transparent investments for retirement accounts.”
“The industry is moving in that direction,” she said Thursday at a Consumer Federation of America Conference in Washington. “We're getting lower fees in these investment options even before the rule is [applicable].”
She cited announcements by several wirehouses and independent broker-dealers over the last few weeks that they will no longer offer commission-based products in retirement accounts, though those statements were made before the election of Mr. Trump.
She also noted firms such as
BlackRock and Fidelity that are reducing the costs of their funds and the general movement toward lower-cost passive investing.
“We know that once these market forces have been unleashed, we're really not going back to the old ways,” Ms. Borzi said, referring to what proponents of the rule consider inappropriate high-fee investment products that erode retirement savings.
(More: The most up-to-date information on the DOL fiduciary rule)
She declined to address the anticipation that President-elect Donald Trump and the Republican Congress will repeal or eviscerate the rule.
“But I will say this: The customer-first principle that's embodied in the rule has already taken hold in the marketplace and companies are not going back,” Ms. Borzi said. “They're going to continue to move in that direction.
“I'm not going to conclude that this rule will go away,” she said.
In brief remarks to reporters after the event, Ms. Borzi was philosophical about the prospect of Mr. Trump undoing the rule, which is the signature achievement of her regulatory career.
“We've put in motion a process that builds on what the industry was already doing. We've just accelerated it a bit. I don't know what's going to happen next. I don't want to speculate. But the best interest principle is there,” Ms. Borzi said.
The rule also faces threats in the legal system, where it is the target of four ongoing lawsuits.
