Companies Sue over Obama's Rules on Retirement Planning

By Lawler, Joseph | Examiner (Washington, D.C.), The, June 2, 2016 | Go to article overview

Companies Sue over Obama's Rules on Retirement Planning


Lawler, Joseph, Examiner (Washington, D.C.), The


Major business groups are suing the Obama administration to stop the Department of Labor's new rule on conflicts of interest in retirement planning, which would allow people to sue financial advisers, among other changes.

Five national associations, along with some state-based groups, announced Thursday that they had filed suit in the U.S. District Court for the Northern District of Texas to challenge the so-called fiduciary rule. That rule requires that brokers and other agents managing retirement accounts act in their clients' best interests.

In a statement, the groups said they are asking the court to review whether the Labor Department "overstepped its boundaries, creating a rule that will leave Americans with fewer retirement choices, higher costs and reduced access to professional financial advice."

In particular, they cited the right to class action suits against agents as a problematic aspect of the sweeping rule.

The national groups included the U.S. Chamber of Commerce, the Financial Services Institute, the Financial Services Roundtable, the Insured Retirement Institute, and the Securities Industry and Financial Markets Association. Also joining the suit were the Greater Irving-Las Colinas' Chamber of Commerce, Lake Houston Area Chamber of Commerce, Lubbock Chamber of Commerce, and Texas Association of Business.

After reviewing the rule, finalized in April, the Chamber determined that it would have "serious adverse consequences" for businesses sponsoring retirement plans and savers, said David Hirschmann, head of the group's Center for Capital Markets Competitiveness. Hirschmann said the group remains committed to working toward clear rules for advisers, but that "at this time, that means going to court."

President Obama and congressional liberals have backed the regulation as a way to protect savers from conflicted retirement advice. In some cases, people with IRAs or other tax-privileged accounts received advice from brokers or insurers who steered them into inappropriate, high-fee investment products for which the advisers received compensation. …

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