Just as quickly as it was passed, the Senate approved a resolution to kill the DOL Fiduciary Rule on Tuesday (May 24). President Obama has made it clear that he will veto the resolution should it find its way onto his desk. The resolution passed with a vote of 56-41, a far cry from the 290 supermajority needed to override a presidential veto.
Those who support the rule argue that it will protect the middle class investors from advisors who may be recommending high-fee products that reap high profits for the advisor and high risk/low reward for the investor. While those who oppose the rule argue that the rule will end up hurting the middle class by resulting in significant increases in regulatory costs for advisers making investment advice much more expensive.
And those who oppose the regulation have been quite vocal about their disapproval. Senate Majority Leader Mitch McConnell has warned that fees for investing could more than double when the rule takes effect, adding “many consumers could risk losing access to quality, low-cost retirement advice.”
Phyllis Borzi, the Assistant Secretary of Labor and the primary architect of the DOL Fiduciary Rule expressed little concern about the Senate’s move to reverse the regulation, saying “I found it fairly remarkable and somewhat gratifying that, except on Capitol Hill, we haven’t had much bombast from the industry like we did when the proposal came out or in 2010 when the original proposal came out.”
Though it’s clear the fight isn’t over yet, some industry firms have already started making adjustments to their products and business models to accommodate the regulations new requirements. Taking the stance that the unlikelihood of the Senate reaching enough votes to prevent and imminent Presidential veto means the regulation is here to stay.