Warren, Cummings: Financial firms exaggerate harm from fiduciary rule

Greg Nash

Financial firms are significantly exaggerating the harm they face from a contentious retirement investment rule, according to Sen. Elizabeth Warren (D-Mass.) and Rep. Elijah Cummings (D-Md.).

The two argued in a letter Thursday that financial firms are all doom and gloom when pushing Washington policymakers on the rule-making effort, but are much more optimistic when talking to investors about it.

And that’s significant, according to the pair, since the firms are legally required to be forthright with investors about the challenges they face.

{mosads}“Publicly traded companies are rarely held accountable for the assertions they make when lobbying in Washington, even if those assertions are untrue,” they wrote to Labor Secretary Thomas Perez. “But when communicating with investors, publicly traded companies are required by law to provide full and accurate information.”

The letter marks the latest volley in an intense lobbying battle over a “fiduciary duty” initiative that would require retirement investment advisers to act solely for the benefit of their clients. Advocates of the rule, including President Obama, argue it will protect investors from being steered toward pricey but unnecessary financial products.

The financial industry has fought the rule-making effort tooth and nail, warning policymakers the rule would be unworkable and could kill off a raft of investment advice opportunities.

But such dire warnings or nowhere to be found on quarterly earnings calls held by those firms, where they brief investors are the state of their finances.

For example, Dennis Glass, president and CEO of Lincoln National, told the Labor Department in a July letter the rule would be “immensely burdensome” and “extremely intrusive,” and questioned whether firms would be even able to work with it.

The head of the life insurance company had a different message for investors two months earlier.

“We don’t see this as a significant hurdle for continuing to grow that business,” he said, adding that he was “confident” the firm could respond to any regulatory changes.

Similarly, Mike Wells, the head of Jackson National Life Insurance Co., blasted the rule as “very difficult, if not impossible” to comply with in a letter to the Labor Department. And with advisers, he said his firm could adjust “quickly and effectively” to the rule, gaining an edge on competitors.

The Labor Department has struggled to write the rule for years, amid fierce pushback from the industry. But now the effort seems to be in its final stages. A proposed final rule is pending before the Office of Management and Budget for review, and the rule could actually be put into place sometime in the next few months.

Tags Elizabeth Warren Thomas Perez

Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Regular the hill posts

Main Area Bottom ↴

Top Stories

See All

Most Popular

Load more