DOL Public Comment: Protect Investors’ Right to Honest Financial Advice
The Department of Labor’s fiduciary rule is at risk of being delayed or repealed. We recently submitted a public comment in support of the rule because we believe that all investors have the right to trustworthy financial advice. No matter what happens, we will continue to put our customers’ interests first.
In April 2016, after years of study and public debate, the Department of Labor (DOL) finalized the fiduciary rule. The rule, which was supposed to be effective this April, requires money managers who provide retirement advice to act in their customers’ best interests. At Betterment, we have long been supporters of the rule. In 2015, we first submitted a public comment in which we explained the rule’s benefits and took issue with the misleading arguments advanced by financial firms fighting the rule.
After this fall’s presidential election, there was widespread speculation about whether the rule would be rolled back. We publicly asked then-President-elect Donald Trump to keep the fiduciary rule intact and sent a letter to Sen. Elizabeth Warren, D-Mass., explaining our support for the rule.
On Feb. 3, President Trump signed a memorandum directing the DOL to reconsider the rule, signaling that it was at risk of being delayed or withdrawn. On March 2, the DOL formally proposed a 60-day delay of the rule and stated that it was beginning the review called for by the president.
Now, we’ve submitted the below official public comment to the DOL, expressing our concerns that a delay would needlessly harm investors and, even worse, could be used as an opportunity to weaken or repeal the rule.
Betterment’s Letter to the Department of Labor
Ladies and Gentlemen,
I am writing on behalf of Betterment LLC, an SEC-registered investment advisor, in opposition to the proposed delay of the Department of Labor’s fiduciary rule. As an automated investment service that provides fiduciary advice to more than 220,000 clients, we are strong supporters of the rule.
The fiduciary rule is necessary to ensure that Americans receive investment advice that is in their own interests, instead of conflicted sales pitches for high-fee products. For years, the financial industry has put its own interests first, costing investors billions of dollars. The fiduciary rule, which is currently slated to go into effect on April 10, would change that. We believe that any delay would needlessly perpetuate conflicted advice at investors’ expense.
Betterment has consistently supported the fiduciary rule and submitted a formal comment expressing our support in September 2015. Before finalizing the rule, the Department of Labor considered an extensive factual record and thousands of comments. The Department of Labor also significantly adjusted its initial proposal to accommodate the legitimate concerns of impacted firms. Since then, the industry has had nearly a year to prepare for the rule’s applicability and has expended significant resources in doing so.
The fiduciary rule may not be perfect—no regulation ever is. But the fiduciary rule is the only realistic hope for prompt action to improve the quality of retirement advice. A delay would be bad enough, but it would be even worse if the delay is used as an opportunity to dilute the rule or remove it altogether. We are extremely concerned about this possibility. If the Department of Labor wishes to further consider or revise aspects of the fiduciary rule, it can certainly do so once the rule is actually in effect. That is, the Department can take another look at the rule without imposing a delay that would imperil the rule itself.
Some firms that have opposed the rule claim that a “unified best interests standard,” which would also cover non-retirement accounts, would be preferable. That sounds great in theory, but it is not realistically happening any time soon—and these firms know it. The fiduciary rule has already let to positive changes in the investment industry, such as reductions in fund fees and changes to conflicted service models. If the rule is delayed or watered down, these positive changes could disappear.
For the benefit of the millions of Americans saving for retirement, we ask that the Department of Labor allow the fiduciary rule to go into effect this April.
Founder & CEO
More from Betterment:
Bogle on the Importance of a Fiduciary Duty for Money Managers
Jack Bogle describes his strongly held views on fiduciary duty. In his words: “If you touch another person’s money, you [should be] a fiduciary.”
Jon Stein on “How I Built This:” Reflecting on Our Story
Jon Stein joins NPR’s Guy Raz for an episode of “How I Built This” to look back at how Betterment started, what mistakes were made, and how they turned into learnings for the robo-advisor we are today.
Bogle on Building Vanguard and Changing an Industry
Jack Bogle describes the challenges and thrill of building Vanguard, and what kept his team centered through tumultuous change. The first in our four-part Q&A series between Jack Bogle and Betterment’s Jon Stein.
Explore your first goal
This is a great place to start—an emergency fund for life's unplanned hiccups. A safety net is a conservative portfolio.
Whether it's a long way off or just around the corner, we'll help you save for the retirement you deserve.
If you want to invest and build wealth over time, then this is the goal for you. This is an excellent goal type for unknown future needs or money you plan to pass to future generations.
How would you like to get started?
Your first step toward a smarter investing future starts here.
Create a Betterment account
Go ahead and join the smart, modern way to invest.
See what we can do for you
Tell us a bit about yourself, and we'll show you the benefits of investing with us.
Get a free investing checkup
Help us get a sense of your investing approach and see how you could improve.
Transfer a 401(k) or an IRA
Move an existing retirement account into a Betterment IRA.
Download the mobile app
Enjoy the Betterment experience anywhere on the go.