Outgoing Republican SEC Commissioner Dan Gallagher warned late Monday that the Department of Labor’s fiduciary rule for pension plan advisors will harm investors and the capital markets.
By pushing for asset-based fee arrangements and making commission compensation nearly impossible, the DOL is acting as a government nanny, Gallagher contended, and is stripping investors of their ability to choose which advice to follow.
“Investors benefit from choice: choice of products, choice in advice providers and choice in making decisions for themselves,” he said.
He chided the Labor Department for refusing to use the Financial Industry Regulatory Authority’s suitability guideline as a proper standard of care for brokers.
While DOL has said the rule is only a proposal, Gallagher called it a fait accompli.
He said the rule should have allowed adherence to an SEC fiduciary standard that would automatically make pension plan advisors compliant with the new DOL guidelines.
Gallagher has said he is leaving soon. His expected successor is Hester Peirce, a member of the SEC Investor Advisory Committee and a director at the Mercatus Center, a market research think tank at George Mason University.