The Obama administration's plans for an overhaul of financial adviser regulations in the US have come under fire from the editors of The Wall Street Journal.
In a fiery editorial published in the Murdoch-owned flagship masthead on Monday, the US Department of Labor's controversial proposal to extend a fiduciary duty to all American investment advisers was slammed as the first step towards an ill-advised commissions ban.
"The Obama Administration may have only 17 months to go, but that's still enough time to do plenty of economic damage," the editorial opined.
"In practice, the new standard will raise costs and limit choices for people of modest means who need financial advice."
Not unlike Australia's FOFA legislation and the UK's Retail Distribution Review, the Department of Labor's proposal would require advisers to disclose the nature of their remuneration and whether they operate under a best interest duty or not, as well as introduce mandatory written contracts to the advice relationship.
Should it be implemented, the WSJ is concerned that phone-based commission-remuneration advice would be killed off, thereby restricting access to advice for those who need it most, citing Employee Benefit Research Institute research that 45 per cent of Americans have accounts with less than US$25,000.
The editorial also criticises Labor Secretary Tom Perez – who, the publication says, "lacks the authority" to enforce the proposal – for his alleged suggestion that robo-advice could take the place of phone-based advice aimed at lower-balance investors.
"We're not sure we trust Siri of iPhone fame as a stock picker," the editorial stated.
"We'd prefer the flesh-and-blood adviser who may have been recommended by a friend."
Meanwhile, a number of members of the US Senate Finance Committee – including eight of President Obama's fellow Democrats – have written to the Department of Labor to express concern that the proposal may have an adverse impact on low- and middle-income earners.
"We support the administration's efforts to update the fiduciary rules ..., however, we are hearing a number of thoughtful concerns from stakeholders about the re-proposed rules, and we believe that the guidance can be improved and enhanced," the letter stated.
Aleks Vickovich is contributing editor at ifa based in Washington, DC
FASEA has conceded its guidance on scaled advice may not be legally reliable, ad...
A key super industry body has suggested the government’s forthcoming reforms t...
With rising compliance costs and more risks abounding for planners who try to be...