Labor Secretary Alexander Acosta's Wall Street Journal op-ed last week on the DOL fiduciary rule is a public service. Secretary Acosta writes with candor on the administration's opposition. In so doing, he advances the fiduciary conversation.
Acosta first sets the stage for his argument, noting, "Americans should be trusted to exercise individual choice and freedom of contract … . Trust in Americans' ability to decide what's best for them and their families leads us to the conclusion that we should seek public comment on how to revise the rule."
He concludes, "The Labor Department will roll back regulations that harm American families. We will do so by respecting the principles and institutions that make America strong."
Secretary Acosta sets out a philosophy similar to the philosophy offered by Trump advisor Gary Cohn, "We think it is a bad rule. … This is like putting only healthy food on the menu because unhealthy food tastes good but you still shouldn't eat it because you might die younger."
Key takeaways from the op-ed:
- The prominence of the "rule of law" and individual freedom standout.
- Fiduciary opponents' arguments on choice, access, costs or workability are laid to rest. They should be. These oft-repeated arguments are distractions, the shiny objects.
- The administration's new focus on deregulation and free markets reframes the fiduciary discussion. It offers an opportunity and new terrain in which to make the case for fiduciary practices on fiduciary terms. Fiduciary groups should grab it.
- The new discussion requires new arguments. The wisdom of Bill Clinton advisor James Carville should be recalled: "It's the economy, stupid."
As Secretary Acosta suggests, the "rule of law" and the welfare of American workers and families is the perfect lens through which to view deregulation, individual choice, fiduciary duties and retirement advice. Some initial thoughts:
A rule-of-law review suggests stringent fiduciary duties are well-suited for retirement accounts. Why? Fiduciary opponents suggest the rule of law presupposes a fiduciary-free marketplace. Yet the opposite is actually the case. Investment advice, a complex professional service with clear social importance, has been deemed fiduciary in nature for centuries. The rule of law inherently applies fiduciary law to retirement accounts, and fiduciary opponents offer no rationale to conclude otherwise.
