The Glory Days of Elizabeth Warren’s CFPB Are Numbered
Supporters of the fiduciary rule point to people changing jobs, or retiring and weighing a rollover from a 401(k) to an IRA, as among the most vulnerable to advisers putting themselves first.
“That’s where the big money is," said Barbara Roper, director of investor protection for the Consumer Federation of America in Washington, D.C. “And right now there’s a lot of incentive to encourage people to roll over even when they’d be better off staying” in a lower-cost 401(k) plan.
A postponement of the ruling under Trump would hurt middle-income retirement savers, Roper said. While wealthy investors tend to use financial advisers who already are considered fiduciaries, middle-income clients are likelier to get advice from nonfiduciaries, she said.
“They’ll be back at the mercy of advisers who are compensated and rewarded for giving advice that’s harmful to their customers,” Roper said. Middle-income savers “are the people who can least afford this,” she added.
Middle-income Americans were also an emblem of Trump's campaign to win over economically beleaguered voters. At a rally in Cincinnati on Thursday, Trump said he would win tax cuts for the middle class. Mnuchin, meanwhile, promised “the largest tax change since Reagan."
“The Trump administration, working with our Republican majority in Congress, should make sure this harmful, bureaucratic rule does not go into effect as planned,” Representative Jeb Hensarling, Republican of Texas and the House Financial Services Committee chairman, said on Nov. 16 in remarks at the Exchequer Club in Washington. “This is just one example of how unelected, unaccountable government hurts working people.”
Height Securities expects the Trump administration to delay the fiduciary rule's effective date by six months to a year. Height analyst Edwin Groshans predicted in a Nov. 17 note that the rule is headed for the "guillotine."
This article was provided by Bloomberg News.