The controversy over a rule restricting conflicted retirement advice is shifting to states, which are moving to bolster investor protections out of concern the Trump administration will weaken the federal provision, the Wall Street Journal reported today. In recent months, the governors of Nevada and Connecticut signed bills to expand or amplify “fiduciary” requirements for brokers. Legislators in New York, New Jersey and Massachusetts have introduced similar bills. And several other states, including California, have indicated interest in exploring such requirements. Unveiled last year, the Labor Department’s fiduciary rule requires brokers to act in the best interests of retirement savers rather than sell products that are merely suitable and potentially more lucrative for the brokers. Financial-industry leaders have fought against the Obama-era regulation, saying it would limit investment options, elevate costs and potentially cut off low-balance customers from some forms of professional advice. The states’ efforts come as the fate of the federal rule, which partially went into effect in June, remains in question. President Donald Trump shortly after taking office ordered the Labor Department to re-evaluate the economic impact of the rule with an eye toward repeal or revision. The states in many cases are looking to go beyond the federal rule, which only governs advice on tax-advantaged retirement savings, and instead require that brokers uphold a fiduciary standard across all accounts.
