Obama’s Fiduciary Rule Is Especially Bad for the Labor Force

The U.S. Labor Department’s mission is “To foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.” In other words, to build a strong American workforce and make our domestic industries more competitive.

The Department of Labor is now faced with implementing an Obama-era regulation for the financial services industry, called the Fiduciary Rule, that runs counter to the agency’s goals.

The Fiduciary Rule would make drastic changes to the way investors get financial advice. Currently, most investors can pay a fee each time they contact their advisor for investment advice.

This model allows smaller investors, typically those with less than $100,000 saved for retirement, to obtain professional guidance at an affordable price.

But this model would cease to exist for millions of Americans because of the Fiduciary Rule, and instead smaller investors will be forced to get automated investment advice online through what’s called a “robo-advisor.”

Future calamities rarely pan out the way the doomsayers predict, says Elon Musk, the business mogul behind SpaceX and Tesla. But one area in which artificial intelligence could disrupt us completely is in the world of finance.

Since 2010, the number of middle-class families seeking investment advice online dropped 12 percent, and the number of families consulting with a human financial advisor increased 10 percent. This shows us that retirement savers just aren’t comfortable making investment decisions based on automated advice.

What’s more is that investment advice companies have said they can’t continue business as usual if the rule takes effect. Neither Merrill Lynch nor State Farm will continue providing human advisors for small accounts, and MetLife sold a part of its business that employed 4,000 financial advisers across the United States.

Artificial intelligence is already making inroads in the investment advisory business, and the Fiduciary Rule hasn’t even gone into effect.

More disruption is certain to come, so, how can the “Labor” Department possibly implement a regulation that eliminates human jobs and replaces them with a computer? Last month, Chief Judge Barbara Lynn for the U.S. District Court for the Northern District of Texas became the third court to uphold Obama’s Fiduciary Rule. Judge Lynn’s decision came just days after President Donald J. Trump ordered the Labor Department to review the Fiduciary Rule — a move seen as an effort to delay or kill the regulation.

In short, Judge Lynn’s decision makes it more difficult for the Trump administration to kill Obama’s rule, but the new administration is working to delay the rule from going into effect on April 10. A lot must happen between now and April 10 to ensure this rule is halted.

Fortunately, Labor Secretary-designate Alexander Acosta, Trump’s nominee to lead the Labor Department, understands how devastating this rule would be for the financial services industry. Acosta told the Senate Committee on Health, Education, Labor and Pensions on Wednesday that he would abide by President Trump’s directive to review the Fiduciary Rule for retirement investment advisers, indicating he believed the new regulation goes “far beyond” regulating the conduct of investment advisers.

Acosta must still be confirmed by the Senate before he can get to work, and a vote to confirm him has not been scheduled.

President Trump and Acosta know that a strong labor force is the cornerstone of a stronger U.S. economy, and implementing the Fiduciary Rule is not in the best interest of anyone, despite what the rule and its supporters may say.

Obama’s Fiduciary Rule needs to be delayed, and then rewritten, so that investors can talk to a human advisor and computers don’t take away even more American jobs.

The post Obama’s Fiduciary Rule Is Especially Bad for the Labor Force appeared first on RedState.