On Wednesday, March 22, the U.S. Senate’s Health, Education, Labor and Pensions Committee convened the confirmation hearing for Alexander Acosta, President Trump’s nominee for Secretary of Labor. During the hearing, Elizabeth Warren, a supporter of the Department’s Fiduciary Rule, questioned Acosta about the views and principles by which he would evaluate the rule, including the proposed 60-day delay.
The DOL Fiduciary Rule would require advisors to put the interests of their annuity and retirement product clients ahead of their own interests. An advisor would need to provide his or her clients with certain disclosures when the advisor receives higher compensation for selling a particular annuity or retirement product. The DOL Fiduciary Rule could therefore eliminate many insurance agent and brokerage commission arrangements and will increase compliance costs.
Acosta testimony pertaining to the DOL Fiduciary Rule
We include below an abridged transcript of the interaction between Warren and Acosta.
The abridged interchange below took place near the end of the hearing after a number of other senators had opportunity to question Acosta on a variety of labor-related topics.
WARREN: If you are confirmed before this delay is finalized, will you promise to stop it?
ACOSTA: Senator, there is an executive action that addresses with specificity the Fiduciary Rule, and it has asked the Department of Labor to look the rule and to assess specific questions: ‘Will the rule reduce the investment options available to investors?’, I believe was one of them. Will the rule increase litigation? Will the rule financially impact retiree investors?’ The executive action, as I recall, directs the Secretary of Labor and the Department of Labor to repeal or revise the Fiduciary Rule if any of the criteria laid out in that executive order is found. So that criteria really regulates and determines the Department of Labor’s approach to the Fiduciary Rule.
Senator Warren again asked for clarification of Acosta’s views.
WARREN: We know that a 60-day delay will cost retirees $3.7B that they are just going to be cheated out of by unscrupulous retirement counselors, and that’s money they’ll never get back.
ACOSTA: Senator, I don’t have access to the specific numbers that you have, but if the question is, do I think it’s important to protect the American retiree, absolutely.
WARREN: Do you think this rule is a good idea?
ACOSTA: Senator, with respect, the rule goes far beyond simply addressing the standard of conduct for investment advisors.
WARREN: How does it go beyond addressing the standard of conduct of investment advisors? On behalf of millions of American retirees around this country, do you support this rule?
ACOSTA: Senator, with respect, there is an executive action that directs how the Department of Labor will approach this rule. If I am confirmed as Secretary of Labor, I believe and support my following of executive orders of the President who would be my boss.
For more information, see the full video of the nomination hearing on the U.S. Senate website, here.
Matthew Coleman’s primary areas of expertise involve fixed and fixed-indexed annuities and associated benefits. He has over 20 years’ experience in the concept development, pricing, marketing and implementation of these products. He has engaged many of the leading companies and marketing organizations in this growing industry and has initiated or led the development of over 50 unique products.