Some financial advisers are questioning the accuracy of a U.S. Chamber of Commerce report that asserts that the Labor Department fiduciary rule will harm small investors and businesses.
On Tuesday, the Chamber
released a report that compiles statistics from surveys and other data submitted during a recent comment period on the rule. The Chamber highlighted findings that show that 7 million individual retirement account holders could be jettisoned by their advisers because their accounts are too small and that service fees could rise by 200%.
Those outcomes don't ring true to Aaron Pottichen, president of CLS Partners Retirement Services.
"I don't think it's rooted in reality," Mr. Pottichen said. "It runs counter to every other trend we see in the industry. Fees are coming down in 401(k) plans. Fees for individual investors are coming down. This report is more about businesses protecting their bottom lines than making sure people have access to the right advice."
The Chamber put out the report a week after Labor Secretary Alexander Acosta said that the agency would
continue to take public comment for its reassessment of the regulation, which requires financial advisers to act in the best interests of their clients in retirement accounts. The review, mandated by President Donald J. Trump, could result in the modification or repeal of the measure.
The Chamber has been one of the most vocal opponents of the rule, and that's what makes Carolyn McClanahan take its latest report with a grain of salt.
"Their agenda is that they don't want the fiduciary rule to pass," said Ms. McClanahan, founder of Life Planning Partners. "You can skew studies to say what you want them to say."
The Chamber brushed off criticism of its examination of recent comment letters about the fiduciary rule. "A consistent set of themes emerges from the compilation of this data: small-dollar investors will lose out if this rule goes into effect," David Hirschmann, president and chief executive of the Chamber's Center for Capital Markets Competitiveness, said in a statement. "For example, 11 million households with brokerage IRAs will either be dumped from their plans, they'll have fewer choices with less advice, or they'll be subject to a more expensive advisory relationship that may not be the right option for them."
In the report, the Chamber argued that the studies that supported the rule as it was finalized during the Obama administration were flawed.
"Throughout the rulemaking process, the U.S. Chamber warned that the fiduciary rule was built upon a mountain of flawed data and analysis and would harm the very people it was purported to protect by raising costs and limiting investment options," the Chamber report states. "The theoretical academic exercises underlying the rule are giving way to hard evidence, and the evidence is coming in showing that the rule is harming investors."
But Ms. McClanahan said that the data the Chamber cites doesn't prove its point because it is based on surveys of firms.
"It's not a scientific study," she said.
It also doesn't account for the reality of market dynamics, according to Wyatt Moerdyk, owner of Evidence Advisors Investment Management.
"There are advisers like myself who can figure out ways to efficiently advise small accounts," Mr. Moerdyk said.
Supporters of the regulation say it is needed to protect investors from conflicted advice that results in the sales of inappropriate high-fee products that erode savings.
