WASHINGTON, D.C.—Stephen Hall, Legal Director and Securities Specialist, issued the following statement on the decision from a federal district court in Texas to stay the Department of Labor’s (DOL’s) best interest rule from going into effect while the legal challenge continues in Federation of Americans for Consumer Choice, Inc. v. U.S. Dept. of Labor, Case No. 6:24-cv-163-JDK:
“This a bad day for all American workers and savers who need unbiased investment advice from their financial advisers to plan for a decent retirement. The reality is that too many financial advisers are allowed to recommend investments that increase their own income handsomely but saddle their clients with financial products that cost too much, perform poorly, lock up savings, or carry excessive risks. As a result, after a lifetime of hard work, many Americans discover that bad investment advice has forced them to delay retirement for years, suffer a lower standard of living, or even go without basic necessities.
“In April this year, the DOL finalized a strong rule that would protect retirement savers from financial advice corrupted by the adviser’s conflicts of interest. It basically will require all advisers to act in the best interest of their clients. But facing the prospect of losing massive and easy profits from the sale of lucrative annuities, the insurance industry immediately attacked the rule in court. And yesterday, they scored a victory by persuading the Texas judge to stay the rule while the case unfolds. The decision is just plain wrong, and while there is always a chance that the court will ultimately get it right, yesterday’s opinion clearly signals that the court is likely to nullify the rule. Moreover, the opinion rests in part on the Supreme Court’s recent decision holding that courts have no duty to defer to an expert agency’s interpretation of the law it administers.
“The best thing retirement savers can do for now is to ask their adviser—especially their insurance agent—if he or she is willing to comply with everything the DOL rules require, including acting in the best interest of the client; receiving no more than reasonable compensation; refraining from making misleading statements; and providing honest disclosures about the adviser’s conflicts of interest, services, and fees. If the adviser says no, find someone else for investment advice; and if the adviser says yes, ask them to put it in writing.”
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Better Markets is a non-profit, non-partisan, and independent organization founded to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
