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SIFMA Chief Assails Fiduciary Rule; Deloitte Study Details Costs and Effects

In an article for The Hill, Kenneth E. Bentsen, Jr., president and CEO of the Securities Industry and Financial Markets Association, writes that while a best interest standard to protect retail investors is necessary, the DOL’s version is not the answer. Even while portions of the Fiduciary Rule remain effectively delayed, retirement savers and the financial industry are feeling the rule’s negative effects, Bentsen writes. In a study commissioned by SIFMA, accounting firm Deloitte details some of the costs and effects of the rule. According to the study, implementation and ongoing compliance efforts have caused significant operational disruption and increased costs for financial institutions and uncertainty surrounding the future of the rule is causing financial institutions to incur additional real costs as well as ongoing opportunity costs. In addition:

  • Survey participants indicated that they spent approximately $595 million preparing for the initial June 9, 2017 deadline and expect to spend over $200 million more before the end of 2017. The ongoing costs to comply are estimated at over $700 million annually.
  • 53 percent of study participants reported limiting or eliminating access to advice brokerage for retirement accounts, impacting 10.2 million accounts and $900 billion AUM.
  • 95% of study participants have made changes to the products available to retirement investors, including limiting or eliminating asset classes offered and certain share classes or product structures

The Deloitte study covered 21 financial institutions representing 43 percent of U.S. financial advisors and 30 percent of the retirement savings assets in the market.