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Disaster or protection? Investor rule Trump delayed starts June 9 (Palm Beach Post)

One business group called the survival of a proposed retirement investment rule “disastrous” this week, blasting the Trump administration.

A consumer group says just the opposite — that it keeps alive the hope investment advisers and companies won’t be allowed to put their “profits ahead of your retirement security.”

Nowhere is this a bigger deal than in Florida, the state with the highest percentage of retirement-age residents, about one in every five.

Welcome to the not-quite-dead “fiduciary rule,” an Obama-era creation that many thought would be shelved in the Trump administration. President Trump ordered it delayed and placed under review. And Congress could still act to delay or gut it.

But Trump’s Department of Labor says the rule will begin June 9 even as large chunks of the financial industry are still fighting to change or stop it before it fully takes effect on Jan. 1, 2018.

A 2015 report by Obama’s White House Council of Economic Advisers warned “backdoor payments and hidden fees” drained a whopping $17 billion a year from retirement accounts. The problem as the report saw it: People selling investments weren’t required to put the client’s interest ahead of their own desire to generate fees and profits. All they had to do was sell “suitable” investments.

The proposed rule establishes a “fiduciary” duty for a broad range of folks selling certain financial products, meaning they have to put the client’s interest first. That principle goes into effect June 9, though other pieces — such as that companies accepting commissions have to put certain provisions into their contracts — are not required until Jan. 1.

It affects people who sell a range of products including annuities, offered by insurance companies as a way to provide annual income and often sold as alternatives to a stock market ever at risk of crashing. Many engaged in the business say the rule represents needless government intrusion, raises costs and encourages lawsuits. Investors should be allowed to make their own decisions, they say, and not be hovered over by a nanny state whose cumbersome rules may well reduce their options.

“The implementation of the fiduciary rule by the Trump Administration is disastrous for American small businesses,” said Katie Vlietstra, vice president of public affairs for the National Association for the Self-Employed, a group representing the self-employed and micro-businesses. “This rule is yet another example of an overly burdensome regulation and exactly the type of regulation President Trump promised to eliminate in order for small businesses to flourish. A one size fits all regulation, just further drives costs up for America’s smallest businesses.”

She continued, “We are deeply disappointed by this decision. It is our hope that the Trump Administration doesn’t continue to put forth regulations that are harmful to small businesses.”

American Council of Life Insurers President & CEO Dirk Kempthorne also used the d-word, disappointed. He said his group “supports reasonable and appropriately tailored rules that require all sales professionals to act in the best interest of their customers. The fiduciary regulation unfortunately does not meet this standard.”

Instead, the rule would only make it harder to sell products that can provide lifetime income, he said.

But national advocacy group Consumers Union, among others, says the change would be good for ordinary people — and bad for those who want to keep the waters muddy to protect big commissions and fees.

“Without the Fiduciary Rule, your advisor could steer you into products that could reap her or him thousands of dollars in fees and could cost you a lot more than you needed to pay,” the group said.