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Betterment Hosts Roundtable on Fiduciary Rule’s Bygone Start Date

If it hadn’t been delayed, the Department of Labor’s fiduciary rule would have taken effect this week—a game-changing shift for individual investors. To mark this juncture, we hosted members of the press and investor advocates for a roundtable discussion on how to achieve better standards for retirement advice.

Articles by Jamie Cartwright

By Jamie Cartwright
Product Manager - Activation & Growth, Betterment  |  Published: April 11, 2017

As the DOL delays a fiduciary standard for retirement planning, real people—and their future livelihoods—continue be negatively affected.

The fiduciary rule’s opponents may find it difficult to completely do away with the rule, based on the wealth of evidence that went into justifying the rule in the first place.

The debate over the fate of the fiduciary rule has generated unprecedented public awareness of what it means to receive fiduciary advice.

What do you do when a new administration delays regulation that would dramatically improve how people receive financial advice for retirement? Our answer this week: Bring together industry experts and financial journalists for an in-depth discussion on what’s at stake in delaying the Department of Labor’s (DOL) fiduciary rule.

Monday, April 10 marked the day the fiduciary rule would have taken effect had the DOL not delayed the rule. Instead, parts of the rule were delayed until June (and other parts until next year) while the DOL considers whether to change or withdraw the rule. The rule would require all financial professionals who provide retirement planning advice to act as fiduciaries for their clients.

In recognition of all that’s at stake in the fiduciary rule’s delay, Betterment hosted a breakfast with members of the media and rule experts, highlighting the historic decision currently in limbo. Explore our recap of the roundtable discussion and Betterment’s ongoing support for the rule below.

Experts and Advocates at the Roundtable

After publicly supporting the fiduciary rule for months, we wanted to collect and highlight other industry voices advocating for the fiduciary rule. The roundtable was led by:

Micah Hauptman Maureen Thompson Seth Rosenbloom Jon Stein
Financial Services Counsel, Consumer Federation of America (CFA) Head of Policy, Certified Financial Planning Board (CFP Board) Associate General Counsel, Betterment Founder & CEO, Betterment

April 10, 2017: The Day the Financial Industry Was Waiting For

Prior to the fiduciary rule’s delay, April 10 was to mark a huge shift for the financial industry. For financial advisors—particularly non-fiduciary brokers and insurance agents—the day would have resulted in more responsibility, more disclosure, and changes to unfair compensation structures. For RIAs and other existing fiduciaries, April 10 represented the start of a more level playing field where customers and their retirement savings come before advisors’ profits.

Our roundtable discussion started by recognizing the simple fact of the matter: As the DOL delays a fiduciary standard for retirement planning, real people—and their future livelihoods— continue to be negatively affected. CFA representative Micah Hauptman noted that every day the delay continues a portion of financial professionals are maximizing their own profit by guiding their customers toward high-fee investments. Any delay of the fiduciary rule furthers such practices that hurt the average investor.

What Does the Delay Reveal?

Jon Stein Fiduciary Rule

Every panelist in the roundtable agreed that the fiduciary rule’s delay can largely be attributed to potent lobbying efforts from the financial industry’s most established players. And in the pause created by the delay, several important issues are revealed:

  • Both Hauptman and Thompson provided examples of financial products that went into development after the rule was proposed but have since stalled in light of the delay. This slowed progress demonstrates the financial industry’s lack of commitment to products that would better serve customers.
  • The fiduciary rule’s opponents may find it difficult to completely do away with the rule, based on the apparent research that went into justifying the rule in the first place. Most participants in the discussion agreed an aggressive “watering down” of the rule seemed more likely than an all-out scrapping.
  • The debate over the fate of the fiduciary rule has generated unprecedented public awareness of what it means to receive fiduciary advice. The media attention on the fiduciary rule—and its impact on consumers—may make the notion of complete reversal less politically feasible.

What’s Next for the Fiduciary Rule?

Speculating on what the future holds, the roundtable turned to what could happen to the rule after the delay and what firms like Betterment will do to support it. The DOL will accept comments regarding its reconsideration of the rule until April 17, after which there will be additional discussion of whether changes should be made. We at Betterment remain dedicated to engaging the DOL on why the rule is important for Americans’ retirement future.

Fiduciary rules and guidelines have been considered by other government agencies, but, as our discussion explored fully, the DOL is currently the best avenue for establishing stronger fiduciary standards on retirement planning. Fiduciary rules and guidelines have been considered by other government agencies, but, as our discussion explored fully, the DOL is currently the best avenue for establishing stronger fiduciary standards on retirement planning.

Over the coming weeks, a new Labor Secretary will be confirmed, and the DOL will review further comments on the rule. In the last round of comments, those in favor of the rule (or opposing delay) outnumbered opposing comments more than ten to one. Nobody in the roundtable forecasted the result of this new comment period being any different.

It’s difficult to forecast what shape the rule will ultimately take. As Betterment CEO Jon Stein remarked, the outcome will not change Betterment’s work. We are already a fiduciary and are committed to acting in the best interest of our clients. However, we believe it’s important to work to move the financial industry forward to be more responsible to all investors.

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