401(k) Advice Rule Opposed by Wall Street Heads to Final Review

The White House is reviewing a Labor Department retirement advice proposal expected to put tough new limits on Wall Street banks and insurers, the latest signal that a final rule could be nearing release.

DOL’s Employee Benefits Security Administration sent the Retirement Security Rule to the White House’s Office of Information and Regulatory Affairs late on March 8. OIRA clearance is the last step in the regulatory process before a proposed regulation can be fully finalized.

The rule, first issued on Nov. 3, would subject more financial professionals to the strictest fiduciary standards of conduct under common trust law and federal benefits statutes, threatening the commissions broker-dealers make on trades.

Regulators claim fiduciary status is necessary to guard investors from advisers intent on maximizing their own profits at the expense of their clients by steering hard-earned savings into high-risk, long-term products. Interest groups representing asset managers and annuity providers claim existing state and federal regulatory regimes already protect retirement investors and that the EBSA proposal would price out low- and moderate income savers.

Labor Department officials appear intent on finalizing the rule well ahead of November’s General Election, when Republican victories could undermine the Biden administration’s consumer-focused 401(k) investing position.