Jun 20, 2016 - 9:00am

Expanding the Path to Retirement Security

Chief Executive Officer, U.S. Chamber of Commerce

As we live longer, it is even more critical for Americans to focus on their financial futures, looking beyond day-to-day needs and planning for long-term security. To maximize their savings, Americans need to start early and stick with it. They must have access to good retirement plans and sound investment advice. But a new rule by the Department of Labor (DOL), which is well intended but poorly designed, threatens both. The so-called fiduciary rule could jeopardize the retirement security for millions of people by imposing new restrictions and unworkable requirements on financial advisors.

We have no disagreement with setting a clear standard to ensure that investors get good financial advice. Unfortunately, the DOL’s flawed rule will harm the very people it intends to protect—smaller savers and small business retirement plan participants.

Instead of helping savers prepare for retirement, the rule will limit their options. The advisors to small business plans will be hit with extensive new requirements and restrictions, making it more challenging and expensive to serve their clients. These higher costs will be passed on to small businesses, leaving some companies no choice but to stop offering retirement plans. Some may stop serving small businesses altogether, resulting in fewer options for workers.

Moreover, the DOL rule includes a troubling provision that creates significant new legal risk for financial advisors, who will now face the threat of class action lawyers challenging their every move. This will only encourage frivolous class action lawsuits and line the pockets of plaintiffs’ lawyers, while consumers get pennies on the dollar in settlement. Financial advisors will find it harder to help small-dollar savers with the greatest need for retirement advice. And it gives another good reason to limit their retirement services—or completely eliminate them.

As a result of the regulation, more than 9 million U.S. households could see their retirement security wither away. The stakes are too high to let the rule stand. Earlier this month, the U.S. Chamber of Commerce joined forces with business allies and mounted a court challenge to the fiduciary rule. We believe that the DOL overstepped its authority and crafted a legally flawed rule that will restrict choice and access at a time when we need to make it easier, not harder, for people to save for the future.

By going to court, we hope we can reverse this course and ensure that hardworking Americans have an expanded path to long-term financial security.

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About the Author

About the Author

Thomas J. Donohue
Chief Executive Officer, U.S. Chamber of Commerce

Thomas J. Donohue is chief executive officer of the U.S. Chamber of Commerce.