Attorney General Xavier Becerra Urges Acting U.S. Labor Secretary Hugler To Put The Interests of Consumers Above Those Of Retirement Advisors
SACRAMENTO – Attorney General Xavier Becerra today urged Acting U.S. Secretary of Labor Edward Hugler to immediately implement the “fiduciary” conflict of interest rule, which would require those who provide retirement investment advice to put the interests of their clients above their own financial gain. Under current rules, which went into effect 40 years ago, many such advisors are only subject to a "suitability" standard, which allows them to choose investments that make more money for them, rather than what is best for their clients. Creating a fiduciary conflict of interest rule makes it clear that the retirement advisor’s legal responsibility is solely to the clients they are advising. The rule was scheduled to go into effect on April 10, but has been delayed by the Trump Administration.
“This rule is a simple way to empower consumers,” said Attorney General Becerra. “Under the existing rules, people are sold investments which may not be the best choice for them because their advisor is receiving extra compensation from the investment company. This concern is even more acute for the elderly, non-native English speakers, and those with limited savings for whom every dollar earned is crucial. Individuals trying to save their hard-earned money for retirement deserve to know that the advice they are receiving is unbiased and in their best interest.”
This conflict of interest has been estimated to cost Americans $17 billion a year. Over the past six years, the Department of Labor has led an extensive, thorough, and inclusive rule-making process, including receiving more than 3000 public comments from a wide range of viewpoints.
In his letter to Secretary Hugler, Attorney General Becerra wrote, “After years of comprehensive study and debate, it is now time to act. I ask that the Department of Labor finally implement these important investor protections, without further delay.”
A copy of the letter sent to the Department of Labor is attached to the electronic version of this release at oag.ca.gov/news.