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March 20, 2015

Surprise: Industry Peddling and Spinning an Industry-Purchased “Study” that is Flawed and Baseless

Another industry-purchased “study” attempting to prevent the Department of Labor (DOL) from proposing a rule to stop conflicts of interest and require advisers to act in the best interests of savers was released this week.  But don’t be fooled. This so-called “study”, conducted by NERA Economic Consulting, was paid for and commissioned by the Securities Industry and Financial Markets Association (SIFMA), one of Wall Street’s biggest DC lobby shops that has spent over $8 million lobbying for Wall Street’s interests last year alone and is actively opposing of DOL’s rulemaking.

This “study” creates straw man arguments and then, surprise, knocks them down.  It is little more than an attempt to undermine the recent robust, fact based, unbiased White House Council of Economic Advisers’ Report (CEA Report).  It is really just Wall Street’s latest weapon in its scorched earth strategy to prevent the American people from even seeing DOL’s proposed rule to end conflicts of interest and require advisers to act in their clients’ best interests.

For example, the NERA “study” argues that the CEA Report cannot be subject to a cost-benefit analysis. But that wasn’t the purpose of the CEA Report. In fact, the only way to conduct a cost-benefit analysis is by having DOL’s proposed rule published so we can all see what it actually says, something that SIFMA – the group that commissioned this report – is actively working against.

The NERA “study” also misleadingly claims that the findings of the CEA Report are based on an overly broad interpretations of the studies that it cites. But the CEA Report relies on multiple, independent peer reviewed academic papers that all reach the same basic conclusion to support its findings. For NERA to be correct, all of those academic papers would have to be wrong. Most tellingly, there’s no data to back up NERA’s claims that this wholly unsupported, self-serving claim has any basis at all.

Importantly, the NERA “study” doesn’t dispute the CEA Report’s essential findings that most brokers and advisers providing retirement investment advice are actually allowed by law to put their interests above the interests of their clients, leaving some Americans with high fees, subpar performance, and unacceptably risky products. That’s because not even this industry-funded “study” can dispute the fact that closing this 40-year old loophole will save workers and retirees billions of dollars in lost retirement savings every year.

So don’t get fooled by this “study,” or the next “study” that is sure to come.  This is the industry’s standard playbook:  buy a paper that supports the purchaser’s baseless claims; try to give it credibility by calling it a “study”; hope that no one looks beyond the unsupported claims; and, repeat over and over again that a new “study” supports the industry’s claims which are not in fact supported by independent, unbiased evidence, data and analysis.

No one, especially the industry peddling unsupported self-serving “studies,” should be allowed to prevent the American people from seeing a rule proposed by the DOL to protect their retirement savings and enable them to retire in dignity and security.

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