Page 12 - Investment Advisor - December 2021

Beginnings

WASHINGTON WATCH

By Melanie Waddell

Resurrecting 2016 DOL Fiduciary Rule Would

Hurt Low-Income Savers: Study

An advocacy group worries Labor will veer too close to the vacated rule
when it updates its definition of fiduciary.

However well-intentioned, this was the
wrong approach in 2016, and the conse-
quences of repeating this mistake will
be even graver this time for low and
middle-income families.”
According to the research, reinstat-
ing the 2016 Labor fiduciary rule would
reduce the accumulated retirement
savings of 2.7 million individuals with
incomes below $100,000 by approxi-
mately $140 billion over 10 years.
Lopez said reinstating the 2016 rule
would have “the most adverse effects on
Blacks and Hispanics — reducing their
projected accumulated IRA savings by
s the Biden Labor Department Fund also question whether Labor can approximately 20% over 10 years —
is expected to propose a change legally resurrect aspects of the rule that contributing to an approximately 20%
A to its fiduciary rule soon, a law- the court vacated. increase in the wealth gap attributable
yer and a center-right advocacy group Labor Secretary Marty Walsh said in to IRAs for these individuals.”
for Latinos warn that resurrecting the mid-June that Labor plans to issue a new The just-released study maintains
rejected 2016 rule would hurt low- and proposed rulemaking to update the defi- that it uses data and information “on the
moderate-income savers. nition of “fiduciary” under the Employee actual effects” of the 2016 rule as well
A new study, released by Kent Mason, Retirement Income Security Act. That as analysis of what is likely to happen if
an attorney with Davis & Harman, a proposal could come by December. DOL resurrects significant portions of
Washington-based law firm that repre- Mario Lopez, president of the the 2016 rule.
sents big financial companies, and the Hispanic Leadership Fund, said in a For instance, Harmon and Lopez
Hispanic Leadership Fund — which statement that “as working families state that Deloitte studied institutions
sponsored the study — notes that “it across the country struggle to recov- representing 43% of U.S. financial advi-
is widely expected that DOL will be er from the personal and financial sors and 27% of the retirement savings
moving closer to the 2016 fiduciary rule toll of the COVID-19 pandemic, the assets in the market.
that the Fifth Circuit Court of Appeals Department of Labor is sending strong The study found that, as of the Labor
invalidated” in 2018. signals that it intends to reinstate many rule’s first applicability date, “53% of Adobe Stock
Mason and the Hispanic Leadership aspects of its 2016 fiduciary regulation. study participants reported limiting or

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