|Image Replies||0 ()|
|Lifetime||27d 10h 26m 50s|
A divided federal appeals court on Thursday tossed out an Obama-era Labor Department rule that required financial investment advisers to act in the best interest of their clients.
In a 2-1 ruling, the 5th Circuit Court of Appeals said the fiduciary rule bears the hallmarks of “unreasonableness” and constitutes an arbitrary and capricious exercise of administrative power.
The lawsuit stems from a challenge the U.S. Chamber of Commerce and eight other business and financial groups brought against the rule.
The groups argued the Labor Department erased universally recognized distinctions between salespeople and fiduciary advisers and reconfigured relationships among financial and insurance representatives and their customers in setting the new standards of conduct.
In the rule, the Labor Department revised the meaning of an “investment-advice fiduciary” under the 1974 Employee Retirement Income Security Act to include brokers and insurance agents. The change made them subject to new limits on the types of services for fees or compensation they can provide when advising on individual retirement accounts.
“Never before has the mere act of being a salesperson — of recommending the purchase of your company’s product — been deemed an act that marks you as a fiduciary,” the business groups argued in court documents.
In a scathing majority opinion, Judge Edith Jones, a Ronald Reagan appointee, agreed.
“Only in DOL’s semantically created world do salespeople and insurance brokers have ‘authority’ or ‘responsibility’ to ‘render investment advice,’” Jones wrote in the court’s opinion.
“The DOL interpretation, in sum, attempts to rewrite the law that is the sole source of its authority. This it cannot do.”
-battles/378722-federal-appeals-cou rt-tosses-out-obama-era-labor-dept- fiduciary-rule
Judge Edith Clement, who sided with Jones, was nominated to the court by President George H. W. Bush.
The Labor Department had argued its rule was needed to protect retirees and ensure they receive sound advice.
Chief Judge Carl Stewart, who was nominated to the court by President Bill Clinton, dissented from the court’s ruling.
He said the department acted well within its regulatory authority to create new standards for financial investment advisers to better protect consumers as the retirement-investment market has shifted over the last 40 years toward individually controlled retirement plans and accounts.
“Whereas retirement assets were previously held primarily in pension plans controlled by large employers and professional money managers, today, individual retirement accounts ('IRAs') and participant-directed plans, such as 401(k)s, have supplemented pensions as the retirement vehicles of choice, resulting in individual investors having greater responsibility for their own retirement savings,” he said.
“This sea change within the retirement-investment market also created monetary incentives for investment advisers to offer conflicted advice, a potentiality the controlling regulatory framework was not enacted to address.”
No, thats still illegal. Overturning this regulation means that insurance agents are no longer considered financial advisors, theyre regular salesmen again. Id suggest you make sure granny knows not to buy volcano insurance from the slick haired fast talking young man thats bound to show up in coming weeks.
Similarly, stock brokers are no longer financial advisors, they sell a service to turn your money into more money.
Most Financial Advisors I work with are acting as a fiduciary already and are such held to that standard. Its only these small time independent no name advisers who ruin it for the rest of us hard working advisers who actually put the clients needs first because we act in a fiduciary capacity.
just remember this is not about hypotheticals, it is common in the insurance industry to market 80% co-insurance as if it were 80% coverage whereas co-insurance like co-pay is the amount YOU pay, so 80% co-insurance is only 20% coverage, less really when you factor in other stuff
>Id suggest you make sure granny knows not to buy volcano insurance from the slick haired fast talking young man thats bound to show up in coming weeks.
I'll be sure to call her up on my rotary phone before hitting up Donna to come hop in my Deville convertible and get some malts down at Paulie's gas n go
page took 0.0078 seconds to execute