Barbara Roper, the director of investor protection at the Consumer Federation of America, called the legal arguments in the suit “flimsy.” She added that while the trade groups claimed the suit was being filed to protect the ability of retail investors to receive financial advice, the underlying motive was to protect billions in excess profits.
Also objecting to the suit was the Financial Planning Coalition comprising the CFP Board, the Financial Planning Association and the National Association of Personal Financial Advisors.
The coalition warned the suit could negatively impact millions of retirement savers by delaying the start of the regulations.
The Investment Adviser Association issued a statement in support of the rule.
“While the DOL rule will require SEC-registered investment advisers to modify their policies, procedures and record-keeping with respect to retirement accounts, the rule will not fundamentally change the core fiduciary principles governing investment advisors’ service to their clients,” said IAA President and CEO Karen Barr.
SIFMA, FSI and other groups claimed the rule would hurt retail investors by increasing the cost and decreasing the availability of financial advice.
“The rule will shackle Main Street financial advisors with extensive new requirements and constant liability, forcing them to limit the options and guidance they provide to retirement savers,” the five trade groups said in a joint statement.
SIFMA President and CEO Ken Bentsen said the Securities and Exchange Commission should have gone first in establishing a uniform fiduciary duty for financial services providers.
The SEC is scheduled to publicly consider a uniform standard for investment advisors and broker-dealers the same month next year when the DOL’s best interest standard becomes operative. However, SEC timetables are often little more than loose aims, and a new chair is likely to be at the helm no matter which party wins the presidential election.
Leading the legal fight is Wall Street’s favorite lawyer in fighting federal regulation, Gene Scalia, the son of the late U.S. Supreme Court Justice Antonin Scalia.