With the Department of Labor’s latest fiduciary rule on a path to be finalized by the end of the month, 11 broker-dealer, annuities and insurance trade groups made one last effort today to get the agency to delay finalizing the rule and continue the public input process.

In a letter sent today to the White House, DOL Acting Secretary Julie Su and Office of Management and Budget Director Shalanda Young,  the 11 industry associations, including the Financial Services Institute (FSI) and Insured Retirement Institute (IRI), contend that because the agencies rushed the process to get the DOL’s “Retirement Security Rule” to the finish line, they are ignoring the rule's devastating effects and likely legal challenges.

“In light of these flaws, we are asking you to stand up for the integrity of the regulatory process and continue the public input process, rather than finalize the fiduciary rule now,” the trade groups wrote.

The coalition cites what they say is litany of studies and the successful lawsuit that overturned a similar 2016 Obama-era rule, as well as a “rushed” timeline pursued by both DOL and OMB, which reviewed the rule and sent it back to DOL last week. The DOL is expected to make final tweaks and finalize the rule by the end of April, according to attorney Fred Reish, a partner with Faegre, Drinker said.

“The ramifications of this proposed rulemaking are extensive, making the need for public comment and careful review critical. In the view of many experts, DOL’s 2016 rule had devastating effects on low- and middle-income individuals. We anticipate similar impacts should the proposal go final with little change,” the coalition wrote.

The groups cited a study by Deloitte that followed the application of the 2016 DOL rule that found that 53% of the largest firms in the country were reporting they had limited or completely eliminated access to brokerage guidance for retirement accounts because of the rule, which the firms said impacted 10.2 million accounts and $900 billion assets under management.

In contrast, however, other organizations, such as the CFP Board, have argued that investors need tougher fiduciary standards on retirement rollover investment advice. In congressional testimony earlier this year, the CFP Board said that most of their nearly 99,000 certificants in the U.S. accept some form of commission and are still able to adhere to the board’s stringent fiduciary standard

The coalition also said its executives “have grave concerns regarding DOL and the [White House] Office of Information and Regulatory Affairs’’ extremely short review of a major rule that displayed little interest in public input and collaborative discourse.”

“DOL’s process appear driven solely by political deadlines, not policy. The motivation for this rushed process appears to be driven by a May 2024 deadline to ensure that the final rule cannot be subject to a Congressional Review Act vote in 2025,” the coalition said.

As examples of the political nature of the regulatory rush, the trade groups said that President Joe Biden publicly supported finalizing the proposal in its original form prior to the comment period.

The coalition also claims that the DOL rushed the process to finalize the proposal. “There was a historically short comment period. The comment period for the proposal was 60 days, compared to 119 days for the 2010 version of the fiduciary proposal and 105 days for the 2015 fiduciary proposal. Despite the rulemaking period’s inclusion of several significant holidays, DOL summarily dismissed stakeholders’ requests for an extended comment period,” the coalition wrote.

The groups further complained  that “for perhaps the first time in history, DOL held a hearing in the middle of the comment period, rather than waiting for commenters to finish their review of the proposal. As such, stakeholders were prohibited from addressing issues raised in many other stakeholder comment letters in their testimony. An extensive study of substantive retirement rules still in effect concludes that over the past 15 years, DOL spent the shortest time by far finalizing the current fiduciary rule—66 days—with the next shortest time being 110 days.”

The coalition also claims that Democratic senators concerns about the DOL’s rulemaking process, expressed in a December 2023 letter, have been ignored.